Annual Report 2010 - listed companynwr.listedcompany.com/misc/ar/ar2010.pdf · 2011-04-07 · VSPN Property Limited Highway No.3 Sta.136+400 km. Sukhumvit Rd, Banglamung, Chonburi

Annual Report 2010

Nawarat Patanakarn Annual Report 2010

TABLE OF CONTENTS

Page

Message from Chairperson 1

Vision and Mission 2

Board of Directors 3

PART 1 Executive Summary

General Information 6

Summarized Corporate Financial Highlights 9

Nature of Business Operation 10

Risk Factors 15

The Shareholding Structure and Management 17

Related Party Transactions 23

Good Corporate Governance Practice 38

Report from Board of Directors Relative to Financial Reports 45

Audit Committee Report 46

Financial Position and Operation Results 48

PART 2 Report and Consolidated Financial Statements

Report of Independent Auditor 54

Financial Statements 55

Notes to Consolidated Financial Statements 64

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Annual Report 2010

Message from Chairperson

March 28, 2011

Dear All Shareholders Nawarat Patanakarn Public Company Limited

At the beginning of 2010, the political unrest has reduced the bidding contest in the public sector while the stimulus measure for the real estate business would be expired in the first quarter so the construction business has declined during mid-year. Furthermore the fluctuation in global oil price has put pressure on the cost of the construction materials and supplies to increase.

Even though 2010, Thailand has faced with a number of problems, the company is able to main-tain the work in hand for about 13,000 million baht as the company has obtained some oversea job to perform. According to the amount of work in hand, it is expected to maintain the income in 2011 at the level similar to that of the preceding year.

In addition, the company has conducted the registered capital reduction process as approved by the meeting of shareholders with satisfactory response from the market. As of the end of 2010, there is no retained losses; however, like other companies, the company is required to apply the new accounting standards in 2011 to record the expenses related to remuneration of the employ-ees to be retired. Therefore the company is unable to pay dividend to the shareholders. However, the company will try its best to continue seeking for more oversea works and the company has made its utmost effort to generate more profit for future dividend payment to the shareholders.

On behalf of the company’s board of executives, we would like to take this opportunity to express our gratitude to the shareholders, customers, trading partners, financial institutes, business alli-ance, related persons, as well as every employee of the company for your continued support to the business of the company. The company believes that it is able to undertake the business in a stable manner with emphasis on good corporate governance to ensure the maximum benefit to all stakeholders and to become a leader in Thai and regional construction industry.

Respectfully yours

(Mr. Poapat Javanalikikorn) Chairperson

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VISION

“ Concentrate in construction and related business,

both in Thailand and overseas, To be number one in our

specialized area and to be within top five in general

contracting business in Thailand ”

MISSION

“ Develop Planning, working procedure

and measurement system, to increase efficiency

and effectiveness, for the benefit of all stakeholder”

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Mr.Poapat Javanalikikorn

Independent Director and ChairpersonAge 80 Years Shareholding : NoneEducation- Bachelor Degree of Engineering, Utah State University, USA- The Degree of National Defense College of Thailand [Class 28]- Honorary Doctorate Degree in Engineering, Burapa University- DAP’ 55/2006ExperiencePresent : Independent Director and Chairperson Nawarat Patanakarn Public Company Limited

Mr.Prasertphand Pipatanakul

Independent Director and Chairperson of the Audit Committee

Age 76 Years Shareholding : None

Education- Master Degree of Business Administration,

Sasin Graduate Institute of Business Administration of Chulalongkorn University

- Bachelor Degree in Engineering, Chulalongkorn University

- DAP’ 55/2006- Finance for non-Finance

ExperiencePresent : Independent Director

and Chairperson of the Audit CommitteeNawarat Patanakarn Public Company Limited

Board of Directors

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Board of Directors

Mr.Mana Karnasuta

Director and Chief Executive officerAge : 77 Years

Shareholding : 173,285 Shares as January 14, 2011

Education

- Bachelor Degree in Electrical Engineer, Chulalongkorn University

- DAP’ 55/2006

Experience

Present : Director and Chief Executive Officer

Nawarat Patanakarn Public Company Limited

Mr.Niyom Niyamanusorn Independent Director and Member of Audit CommitteeAge : 79 Years

Shareholding : None

Education

- Master Degree, N.S.W. University at Australia

- Bachelor Degree in Engineering, Chulalongkorn University

- DAP’ 55/2006

- Finance for non-Finance 2006

Experience

Present : Independent Director and Member of Audit Committee


Mr.Apichart Dharmasaroja

Independent Director and Member of Audit CommitteeAge : 59 Years

Shareholding : None

Education

- MBA (Marketing, Finance and International Business), Northwestern University, USA

- DAP’ 64/2007

- Director Forum’ 1/2009

- DCP’ 93/2007

Experience

Present : Independent Director and Member of Audit Committee


: Director & Advisor Khun Tawad Mining Company Limited

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Mr.Sook Sueyanyongsiri

Director and Senior Vice PresidentAge : 58 Years

Shareholding : None

Education

- Master Degree of Engineering, Asian Institute of Technology

- DAP’ 35/2005

Experience

Present : Director and Senior Vice President of Operation Department


Mr.Polpat Karnasuta

Director and PresidentAge : 51 Years

Shareholding : 201,200,000 Shares as January 14, 2011

Education

- Bachelor Degree in Business Administration, Oregon University, USA

- DAP’ 7/2004

Experience

Present : Director and President


: President, Thai Contractors Association Under H.M. The King’s Patronage

Mrs.Wattana Samanawong

Director and Senior Vice PresidentAge : 58 Years

Shareholding : 1,073 Shares as January 14, 2011

Education

- Master of Accounting, Faculty of Commerce & Accountancy,

Thammasart University

- Diploma Certificate in Auditing, Faculty of Commerce & Accountancy,

Chulalongkorn University

- Bachelor of Accounting, Faculty of Economics, Kasetsart University

- Accounting for Non-Accounting Audit Committee

- DCP’ 62/2007

Experience

Present : Director and Senior Vice President of Finance and Administration Department


Board of Directors

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1. General Information

History

Nawarat Patanakarn Public Company Limited primarily provides all types of civil engineering construction ser-vices and manufactures pre-stressed concrete piles, other kinds of concrete products and processed steel used in its construction businesses and for sale.

Nawarat Patanakarn Public Company Limited was registered on May 31, 1976 with the registered capital of Baht 4 million. The capital was gradually increased. In 1995, the capital was increased from Baht 400 million to Baht 500 million as new shares were issued and offered to domestic and overseas investors. In September 1995, the Company was incorporated as a listed company in the Stock Exchange of Thailand. Currently, the Company has registered capital amounting to Baht 2,217,950,679 and paid-up capital totaling Baht 1,552,901,243 in the form of 1,552,901,243 common stocks at the par value of Baht 1 per share.

Head Office

Head Office : Bangna Towers A, 18th-19th Floor, Moo 14, Bangna-Trad Road Km. 6.5, Bangkaew, Bangplee, Samutprakarn 10540 Tax ID No. : 3101090413 Company registration number : 0107538000096 (Former No. Bor Mor Jor 532) Web site : www.nawarat.co.th Telephone : (662) 730-2100 Fax : (662) 751-9484 - 90 Company Secretary : Mrs.Wattana Samanawong Tel.(662) 730-2185 Investor Relation Department : Mr.Vajraput Vajrabhaya Tel.(662) 730-2187

Branch Offices - 1796 Bangna-Trad Road Km. 4.5, Bangna, Bangkok

Pre-stressed Concrete Piles, Concrete Products and Processed Steel Plants - 1796 Bangna-Trad Road Km. 4.5, Bangna, Bangkok - 53/4 Moo 9, Prong Akat, Bang Nampreaw, Chachoengsao

Pre-cast Concrete Jacking Pipes and Pre-cast Concrete Shaft Plant - 31/13 Moo 2, Rama II Road Km. 33.5, Bang Krachao, Muang District, Samutsakhon

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Joint Ventures, Subsidiary Companies, Associated Companies and related party (Still run business at December 31, 2010)

Joint Ventures Address Nature of Business

Share of Profits

(Percent)

NWR - SBCC Joint Venture 2034/132-161 Italthai Tower, 34th Floor, Bangkapi, Huaykwang, Bangkok 10310

Construction 50

Nawarat - A.S. Associated Joint Venture

8/24-25 Soi Ladprao 8, Ladprao Road, Chomphon, Chatuchak, Bangkok, 10900

Construction 70

Obayashi - Nawarat Joint Venture 2/3 Moo 14, Bangna Towers A, 18th-19th Floor, Bangna-Trad Road Km.6.5, Bangkaew, Bangplee, Samutprakarn 10540

Construction 30

Nawarat - Samcon Joint Venture 2/3 Moo 14, Bangna Towers A, 18th-19th Floor, Bangna-Trad Road Km.6.5, Bangkaew, Bangplee, Samutprakarn 10540

Construction 51

NWR - STG Joint Venture 2/3 Moo 14, Bangna Towers A, 18th-19th Floor, Bangna-Trad Road Km.6.5, Bangkaew, Bangplee, Samutprakarn 10540

Construction 80

A.S.- Nawarat Joint Venture 2/3 Moo 14, Bangna Towers A, 18th-19th Floor, Bangna-Trad Road Km.6.5, Bangkaew, Bangplee, Samutprakarn 10540

Construction 50

ITD - Nawarat (L.L.C.) Office No.126,1st Floor,Sh.rashid Bin Khalifa AI Maktoum Sheikh Zayed Road, Dubai, U.A.E.

Construction 40

Subsidiary Companies Address Nature of Business

Share of Profits

(Percent)

Meeyahta International Hotel Limited 10th-11th Floor, FMI Center 380 Bogyoke Aung San Street, Yangon, Myanmar

Property development and hotel operation

53

Myanmar NWR Co., Ltd. International Business Center, Suite No.106, 88 Pyay Road, HlaingTownship, Yangon, Myanmar

Construction 100

Utility Business Alliance Co.,Ltd. 21 Viphavadi-Rangsit Road, Chomthong, Chatuchak, Bangkok

Wastewater Treatment

60

NWR (Cambodia) Company Limited 217, Group 1, Smach Meanchey Commune, Smach Meanchey District, Kohkong Province.

Manage and Control Construction Project

100

MIHL (Holding) Company Limited 2/3 Moo 14, Bangna Towers A, 18th-19th Floor, Bangna-Trad Road Km. 6.5, Bang-kaew, Bangplee, Samutprakarn 10540

Invesment in Companies and Public Companies

99.98

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Associated Companies Address Nature of Business

Share of Profits

(Percent)

C.I.N Estate Company Limited 2922/98 Chan Issara II Tower, New Petchaburi , Khwang Bangkapi, Khet Huaikhwang, Bangkok 10310

Property development and Condominium operation

40

VSPN Property Limited Highway No.3 Sta.136+400 km. Sukhumvit Rd, Banglamung, Chonburi 22150

Property development and Villa

25

Related Party Address Nature of Business

Share of Profits

(Percent)

New Decade Company Limited 19 Soi 7, Seiree 7 Road, Suan Luang, Bangkok 10260

Construction -

Ruen Rapee Company Limited 19 Soi 7, Seiree 7 Road, Suan Luang, Bangkok 10260

Property trade -

East Bangkok Assets Company Limited

19 Soi 7, Seiree 7 Road, Suan Luang, Bangkok 10260

Property trade -

In Style Estate Park Co., Ltd. 2159/11 Phaholyothin Road, Ladyao, Chatuchak, Bangkok 10900

Property trade -

ReferencesPosition Address

Share registrar Thailand Securities Depository Company Limited The Stock Exchange of Thailand Building, 62 Rachadapisek Road, Klongtoey, Bangkok 10110 Tel. 0-2229-2800

Auditor Ernst & Young Office Limited Mr. Supachai Phanyawattano Certified Public Accountant (Thailand) No. 3930 33rd Floor, Lake Rajada Office Complex 193/136-137 Rajadapisek Road, Bangkok 10110 Tel. 0-2264-0777, 0-2661-9190

Legal Advisor Weerawong, Chinnavat & Peangpanor Limited 22nd Floor, Mercury Tower, 540 Ploenchit Road, Lumpini, Pathumwan Bangkok 10330

Tel. 0-2264-8000

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2. Summarized Corporate Financial Highlights

(Unit : Million Baht)

Consolidated Financial Statements 2010 2009 2008

Total assets 5,608.37 4,568.68 3,114.74

Total liabilities 4,038.91 3,076.07 1,721.73

Shareholders’ equity 1,569.46 1,492.61 1,393.01

Fully paid common stocks 1,552.90 2,484.64 2,484.64

Total revenues 4,029.84 3,345.02 3,800.64

Net earnings (loss) 54.27 97.93 211.82

Financial Ratios

Net profit margin (%) 1.35 2.93 5.57

Return on equity (%) 3.46 6.56 15.21

Return on total assets (%) 0.97 2.14 6.80

Book value (Baht) 1.01 0.60 0.56

Net profit (loss) / share (Baht) 0.03 0.04 0.09

Current ratio (times) 0.82 1.06 1.30

Debt-equity ratio (times) 2.57 2.06 1.24

Dividend yield (%) - - -

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3. Nature of Business Operation

Nawarat Patanakarn Public Company Limited has provided construction services and manufactured pre-stressed concrete piles since 1976. The corporate securities were incorporated as listed securities in the Stock Exchange of Thailand on September 27, 1995. The Company currently has registered common stocks totaling Baht 2,217,950,679 and fully paid common stocks amounting to Baht 1,552,901,243

Nature of Main Product/Service

Construction Contracting Business

Nawarat Patanakarn Pubic Company Limited is involved in the construction contracting business providing con-struction services to the government sectors, state enterprises, as well as private sectors. It undertakes works of construction as a main contractor, a sub-contractor, or through a Joint Venture business. The Company is consid-ered a leading contractor by several entities; for example, it has been designated a Category 1 A contractor by Department of Highways having the right to make bids in all sorts of the Department’s road construction. Also, the Company has already registered with various government agencies such as Royal Irrigation Department, Public Works Department, Communication Authority of Thailand, Metropolitan Waterworks Authority, Provincial Water-works Authority. The Company acquires construction projects by way of bidding and direct contact with the project owners, with its reputation and impressive track record being the main factors of building its customers’ trust. At present, it is able to undertake various types of works including:

- High Rise Buildings

- Warehouses and Industrial Plants

- Roads, Highways, Expressways, Bridges

- Public Works and Utilities

- Ports, Berths and Jetties

- Power Plants

- Dams, Reservoirs and Irrigation Works

- Wastewater Treatment Plants

- Tunnelling and Pipe Jacking Works

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Pre-stressed Concrete Piles and Precast Concrete Products

The Company established its precast concrete product factories to supply its construction projects and also sell to the public both by bidding and direct employment. The Company’s products include pre-stressed concrete piles, pre-stressed concrete girders and precast concrete pipes for construction of wastewater treatment projects, parapets, concrete pre-cast slabs and sheet pile to protect from land subsidence, with the ratio of production for supplying its own projects to that for selling to the outside people being 30:70 in 2008, 71:29 in 2009 and 36:64 in 2010.

Steel Structure Fabrication

The Company has manufactured fabricated steel product for supplying its construction projects and selling to the outside people, with the ratio of the former to the latter being 51:49 in 2008, 32:68 in 2009 and 89:11 in 2010.

Subsidiary Companies

1. Meeyahta International Hotel Limited (MIHL)

In 1998, the company made an investment in MIHL, a limited company registered in Union of Myanmar, with registered capital of 175 shares at 10,000 Kyat per share or US$277,505. The initial investment was at 17 percent while the company was still a subsidiary company in Premier Group and the investment policy was the policy of Premier Group which planned to expand its investment in neighboring country. MIHL has been involved with the real estate business with privilege to lease the land and building in Rangoon from the Railway Authority of Union of Myanmar for 30 years (starting from 1999) to build an 11-storey serviced apartment for 96 units with total ap-proximate project value of US$17.5 million or about 560 million baht and to make an improvement to the original railway station of the Railway Authority of Union of Myanmar. The construction was undertaken in 1996 by Nawarat Patanakarn Public Company Limited assigned to undertake the construction work of the entire serviced apartment. The serviced apartment was partially opened in April 2001 with official opening ceremony in January 2002. However, the regional economic problem and the international economic sanction against Union of Myan-mar had affected the project until it was unable to satisfy the debt service for the construction cost. Thus, the company is required to arrange the debt restructure agreement with MIHL through partial debt to equity conver-sion. As a result the shareholding portion has increased from 17% to 52.57% and, according to the laws of Union of Myanmar, the investment made in Union of Myanmar is not allowed to be withdrawn from Union of Myanmar. Therefore the company is required to record such partial investment as a loan from shareholders.

During the first quarter of 2007, MIHL received a letter on termination of the land lease contract on such project from the Union of Myanmar government because of non-compliance with the contract related to improvement to the building and accrued land lease payment since 1998 for about US$5 million. To maintain the right as a joint creditors and to postpone the revocation of the contract, the company has sued MIHL for refund of the construc-tion cost of such project. The case has already been completed as the primary court ruled that the company would receive the total construction cost. If MIHL is unable to make the repayment in accordance with the court decision, the court has ordered an auction of the hotel building of MIHL for repayment to the company.

In addition, during the third quarter of 2007, the shareholder, Serge Pun & Associates of MIHL has submitted a letter to inform the company that the company has not complied with the venture agreement since the charge filed for debt payment is held a default of the contract and has called the company the transfer the shares of MIHL back without payment for the share value. The company has mad a written reply to explain that the company has not defaulted such joint venture agreement as claimed.

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At present the company has held 92 shares or 52.57 percent accounting for 19 million baht as of December 31, 2010, the shareholders of MIHL are as follows.

Serge Pun & Associates Ltd. for 20 shares Serge Pun & Associates (Myanmar) for 30 shares Premier Enterprise Public Company Limited for 17 shares Nawarat Patanakarn Public Company Limited for 92 shares Premier International Co., Ltd. for 16 shares Total 175 shares

The company would like to confirm that the other shareholders of MIHL have no relation with the major sharehold-ers and the management of Nawarat Patanakarn Public Company Limited and the company is responsible for the amount not exceeding the entire amount invested.

2. Myanmar NWR Company Limited

In 2000, the Company invested in Myanmar NWR Company Limited situated at International Business Center, Suite No.106, 88 Pyay Road, Hlaing Township, Yangon, Myanmar. The Company holds 100 percent of the shares for the purpose of supporting expansion of its construction contracting in The Union of Myanmar. The registered capital totals Kyat 1,000,000. The paid-up capital amounts to Kyat 500,000 or about three million Baht. The sub-sidiary has not yet operated due to the Myanmar economy.

3. Utility Business Alliance Company Limited

In 2001, the company made an investment in Utility Business Alliance Co., Ltd. which is involved in the manage-ment business of waste water treatment plant. The investment portion was at 50 percent. On November 11, 2003, the company sold its investment to the third party partially so the investment portion was reduced to 33.33%. In the third quarter of 2006 the company purchased the investment back from the third party so the in-vestment portion was 60 percent of the registered capital of 40 million baht, paid-up capital of 40 million baht. The other shareholders of the 40 percent portion are the other juristic persons with no relation to the company, both directorship and shareholding.

4. NWR(Cambodia) Company Limited

In 2007, the company incorporated NWR (Cambodia) Company Limited in Cambodia with total 100 percent shareholding to facilitate the service work and construction supervision in Cambodia with registered capital of 20 million Riels or about 200,000 baht. At present the paid-up capital is 17,000 baht and the company has accepted the work on supervision of the construction of Tonle Sap Bridge with a private company and the employer is L.Y.P. Group Co., Ltd. and the project value is US$2 million.

5. MIHL (Holding) Company Limited

The meeting of the board of directors No. 11/2010 on November 12, 2010, approved the investment in MIHL (Holding) Co., Ltd. with 99.98 percent shareholding of the total registered capital of 1 million baht with an objective to invest in limited and public limited companies.

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Associated Companies

1. C.I.N Estate Company Limited

In September, 2006, the Company invested in C.I.N Estate Company Limited to procure a land and develop it into a 51-storey condominium for the purpose of own residence and forward sale. Named “The Issara Ladprao”, the condominium is located on Ladprao Road, between soi 12 and 14 , with the project price amounting to Baht 1,868.68 million. The construction has commenced since January 2007 and will have been completed in Septem-ber 2011. The investment represents 40 percent of C.I.N’s registered capital.

2. VSPN Property Limited

In February 2007, the Company invested in VSPN Property Limited to develop a land in Banglamung District, Chonburi, in the area of 20 rai and 33 sq. wa into a seaside village comprising 74 units, with the project price of Baht 450 million. The project was commenced in January 2007 and will have been completed in March 2010. The investment represents 25 percent of VSPN’s registered capital.

Joint Ventures

Apart from the Company’s construction contracting and subcontracting, it operates its construction business in cooperation between other companies in the form of joint ventures. The joint ventures allow the Company to undertake projects requiring advance technologies as well as complement its skill sets. Such strategic alliances enable the parties to meet the client’s requirements and maximize the use of their machinery, equipment, and personnel in order for the projects to achieve efficiency.

The joint ventures undertaken by the company have been prepared under the following criteria, that is, the oper-ating results of the joint venture of which the profit is shared by the company less than 20 percent will be recog-nized under the cost method and those of which the profit is shared by the company over 20 percent will be rec-ognized under the equity method.

In 2008, the company and Saraburi Coal Co., Ltd. had formed a joint venture called NWR-SBCC Joint Venture with the investment at 50 percent each to undertake the excavation and removal of earth and coal project at Mae Moh mine of the Electricity Generating Authority of Thailand, Mae Moh District, Lampang. At present, the contract has been signed with the employer with the project value of 16,684,716,676.17 baht (excluding the electrical charge) and the contract term of 9 years. As of December 31, 2010, 15.62% of the work has been delivered.

Nawarat Patanakarn Public Company Limited has presently undertaken the project similar to that of the joint venture. However, the joint ventures already delivered the construction work but there are a few transactions such as loans borrowed, loans extended are as follows.

Joint Venture Percent of profit sharing - Nawarat - A. S. Associates Joint Venture 70 - Obayashi-Nawarat Joint Venture 30 - Nawarat - Samcon Joint Venture 51 - NWR-STG Joint Venture 80 - A.S. - Nawarat Joint Venture 50 - ITD-Nawarat (L.L.C.) 40

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Revenue Structure

Revenues by segment (according to the consolidated Financial Statement)

Nature of Operation 2010 2009 2008

Million Baht %

Million Baht %

Million Baht %

Construction Contracting Business

High Rise Buildings, Ware- houses and Industrial Plants 822.76 20.42 890.61 26.62 1,543.07 40.60

Power Plants 1,410.37 35.00 445.04 13.30 - -

Ports, Berths and Jetties 882.61 21.90 792.75 23.70 242.29 6.37

Roads, Highways, Express- ways and Bridges 333.62 8.28 446.23 13.34 363.36 9.56

Wastewater Treatment Plants 311.64 7.73 185.23 5.54 280.86 7.39

Tunneling and Pipe Jacking Works 31.97 0.79 375.46 11.22 691.40 18.19

Steel Structure Fabrication and Precast Concrete Products 141.96 3.52 124.35 3.72 391.74 10.31

- Interest Income/1 23.42 0.59 13.47 0.41 19.26 0.51

- Other Revenues/2 71.49 1.77 71.88 2.15 268.66 7.07

Total Revenues 4,029.84 100.00 3,345.02 100.00 3,800.64 100.00

Increase (decrease) of total revenues (%) 684.82 20.47 (386.64) (10.17) (161.23) (4.07)

NOTE: 1. Interest income refers to the interest income from financial institutions, joint ventures and other companies.

2. Other revenues include Reversal of Allowance for Doubtful Debts, Reversal of the Group of management’s special Benefit payable, Profit from sale of assets and other incomes.

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4. Risk Factors

Internal and external risk factors affecting the Company’s operation are summarized as follows:

1. The Economy and Economic Growth: The construction contracting business directly relates to the coun-try’s economy and economic growth. The Company’s operation, inevitably, has been affected by the re-cession. However, the corporate diversified supporting businesses allow diversification of risk. The eco-nomic recovery stage results in the Company’s small growth rate. Construction works in the private sector are still subject to risk in terms of liquidity. Therefore, the Company has been careful with undertaking projects in this sector. The state of the economy adjusted positively in a short- time period resulting in a little increase in the Company’s expansion rate. To survive in the industry, the Company has tried to ac-quire Works in the field it mostly specializes with less competitors. That includes works such as Jacking Pipes, Underground Tunnel, Sewage System and the like. In addition, the Company has become inter-ested in tendering for more foreign projects either in the form of individual or joint-venture company. Still, dealing with those in private sector is risky in terms of the Employers’ liquidity; as a result, much more care has to be taken in signing various projects whether within or outside of the country.

2. Change in Material Prices: The cost of materials is one of the major types of cost to be calculated when making a bid. The change in material prices directly affects the corporate profit particularly that in petrol prices that has impacted on road construction and the cost of delivering materials. Even though the prices of oil and steel (one of the main materials) were falling down during 2010, there have been no confidence that such plummeting prices would bounce back to high prices again, which causes a risk in calculating and fixing construction costs.

Moreover, the cost of imported materials depends on exchange rates.

3. Lack of the Construction Workforce: The recovering real estate segment results in competitions among contractors over labors. Generally, there are no sufficient labors during important holidays such as New Year’s and Songkran holidays. An incentive in the form of increased overtimes is necessary to improve such situation. The operation cost consequently increases in certain times of the year. In general, we do not usually have problem with unskilled labors; on the other hand, when it comes to more expertly skilled labors it becomes more problematic. Some construction projects such as high-priced housing estates are always in need of those highly skilled labors at the same time resulting in competing for such labors among contractors. Therefore, in case the Company is awarded with this kind of project a good planning needs to be done in addition to the negotiation in advance with the highly skilled.

4. Unpredictable Difficulty: Although contingency costs are explicitly part of the total cost estimate, limitations in terms of time or unpredictable problems such as floods or other natural catastrophes still adversely af-fect projects and no compensation can be sought from clients.

5. Free Trade in Service Sector: The policy of opening up a Free-Trade Zone in the service Sector that cov-ers works of construction leads to the increase in the number of foreign competitors. In this, the Company

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realizes the need to develop its manpower, construction equipments and techniques to be able to compete with other companies in the long run.

6. Capital Sources and Interest: Contracting business requires a huge sum of working capital, especially the project hinging on a high investment in machinery. The fact that if there is an obstacle in finding financial support the project might become problematic makes the Company try to get ready by asking for more loan from various commercial banks in support of the Company’s business expansion and for the Com-pany to have more choices. In addition, the risk from the fluctuation of future interest rates may also affect the Company’s operational result and cash flow; there is on use Derivative of protect it from such a risk.

7. Real estate development project : The company has recently expanded its reach into the real estate de-velopment business even though there is risk because the company has never been involved in this busi-ness. However, the company has already made a study in this business for some time through joint in-vestment with those with long experience. If it is a sole investment, the company would employ the other company with experience to make a study on the project in which the company in interested for invest-ment before any proceeding.

8. Legal case related to Meeyahta International Hotel Limited (“MIHL”) :

In 1995, the company made in investment in MIHL located in the Union of Myanmar at 52.57 percent of the total registered capital 1.75 million Kyat and undertook the construction work of the serviced apartment for MIHL on the land plot leased from the Railway Authority of the Union of Myanmar. It is evident that MIHL has not paid the construction cost and is unable to pay the remaining balance. On July 10, 2007 the com-pany filed the case with the court of the Union of Myanmar to claim for the construction cost of US$14.67 million, including the interest charge for late payment until the payment is received in full. The case has already been completed as the primary court ruled that the company would receive the total construction cost. If MIHL is unable to make the repayment in accordance with the court decision, the court has ordered an auction of the hotel building of MIHL for repayment to the company.

However, in 2007, after the company has filed the court case for payment of the construction cost, a small shareholder of MIHL has sent a letter to inform the company that the company had defaulted the joint venture agreement and had taken a legal action against the company to claim for transfer of MIHL shares to such small shareholder. The case is being examined by the primary court of the Union of Myanmar.

In the third quarter of 2010, the company has sold the entire investment in MIHL to MIHL (holding) CO., Ltd., a subsidiary which is 100 percent owned by the company, for 19.5 million baht of which the payment has already been received. Later the company has sold the entire investment in MIHL (Holding) Co., Ltd. to the third party at 20 million baht and the sale contract has been signed. Such contract has indicated that the company is required to received the total payment within 3 months, ending in mid-march 2011, in the payment condition.

9. Joint Venture Companies’ ability or inability to comply with Joint Venture agreements:

Sometimes, the Company is obliged to get into bidding under the name “Joint Venture” working hand in hand with other companies. Whether working in such form becomes successful or not depends on both the abilities of the Company itself and those of other Joint-Venture companies. For the latter, when they face problems whether about money or how to work; in other words, if they cannot perform their duties in accordance with the Contract, all parties involved will each suffer bad effects from operations. If, however, they are able to tackle the problem and continue working together, there will not be much effect to the Company. On the other hand, in case their problems can not be solved, the Company may have to help resolve them by putting more investment money in the Project to prolong their work operation(if the prob-lem is about money) or by sending an expert to them(if the problem is about working).

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Annual Report 2010

5. The Shareholding Structure and Management

5.1 Shareholders

The top ten shareholders as of January 14, 2011 are as follows:

Shareholder Nationality

As of January 14,2011

Number of Shares %

1. The Karnasutas (See Note) Thai 217,051,212 13.98

2. Thai NVDR Company Limited Thai 96,644,035 6.22

3. Mr. Suchart Areekul Thai 70,227,130 4.52

4. Mrs. Sunee Triyangkoonsri Thai 30,068,138 1.94

5. Mrs. Athitaya Witayanan Thai 26,875,000 1.73

6. Mr. Suthep Sethboonsang Thai 24,611,200 1.58

7. Mr. Tawee Harnkraiwilai Thai 24,000,000 1.55

8. Mr. Chaiwat Tiempanich Thai 16,000,000 1.03

9. Mrs. Kanitda Karnasuta Thai 14,437,500 0.93

10. Mr. Suwat Lerdpunyarote Thai 12,880,000 0.83

11. Other Shareholder 1,020,107,028 65.69

Total 1,552,901,243 100.00

NOTE. The Karnasutas shareholders include: 1. Mr. Mana Karnasuta Amount 173,285 Shares 2. Mrs. Nawarat Karnasuta Amount 278 Shares 3. Mr. Polpat Karnasuta Amount 201,200,000 Shares 4. Mrs. Sutasanee Karnasuta Amount 4,553 Shares 5. Mr. Wasin Phuttharee Amount 6,371,313 Shares 6. Mrs. Sutheera Phuttharee Amount 900,000 Shares 7. Mr. Apathorn Karnasuta Amount 8,076,235 Shares 8. Mrs. Anatchanit Karnasuta Amount 325,548 Shares Total Amount 217,051,212 Shares

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Annual Report 2010

5.2 Organization Structure/Personnel

The Company’s Management structure consists of the Board of Directors, Audit Committee and executive Officer.

The Company’s Board of Directors

Annual general meeting of shareholder for the year 2010 held on April 29, 2010 approved that the Company Board of Directors consists of 8 directors as follows:

1. Mr. Poapat Javanalikikorn Independent Director and Chairperson 2. Mr. Prasertphand Pipatanakul Independent Director and Chairperson of the Audit Committee 3. Mr. Niyom Niyamanusorn Independent Director and Member of Audit Committee 4. Mr. Apichart Dharmasaroja Independent Director and Member of Audit Committee 5. Mr. Mana Karnasuta Director and Chief Executive Officer 6. Mr. Polpat Karnasuta Director and President 7. Mrs. Wattana Samanawong Director and Senior Vice President 8. Mr. Sook Sueyanyongsiri Director and Senior Vice President

Note No.5 Mr. Mana Karnnasuta has resigned from the board of director and Chief Executive Officer of the com-pany and the meeting of the board of directors No. 7/2010 on July 19, 2010, made an approval to his resignation with effect on July 20, 2010.

Responsibilities of the Board of Directors

According to the Company’s regulations, the directors are responsible for managing the Company in line with objectives, regulations and resolutions of shareholders’ meetings as well as maintain the corporate benefit with honesty and integrity. The Board may assign a director or directors or any individual to undertake a piece of work on behalf of the Board themselves, except for matters required by law for adoption of the resolutions before work-ing such as the sale or transfer of the entire business or significant part of it to others, increase or decrease of the corporate capital.

Signing and binding by Directors

Two directors sign and affix the corporate seal. with no exception for Independent Directors or Member of Audit Committee. Every of the directors can sign.

The Composition and Appointment of the Board of Directors

The Board of Directors consists of not less than five persons appointed by the shareholder’s meeting. Not less than half of the directors must be residents of The Kingdom of Thailand.

In the election of directors, a shareholder has one vote for one share that he/she holds. Each shareholder is re-quired to exercise all their votes, and may vote for one person or more to be a director/directors. Votes cannot be shared. Individuals who receive the highest votes are to be corporate directors. Should the number of persons receiving the highest votes exceeds the number of directors required, the chairperson will finalize the appoint-ment of the persons receiving equal votes who are in the last ranks of those given the highest votes.

In each annual general meeting, one third of the Company’s directors are due to resign. If the existing total num-ber of directors cannot be evenly divided into three groups, the number of directors due to resign should be as closest to one third of the corporate directors as possible. During the first and the second year after the registra-tion of the Company, directors due to resign are determined by drawing. For later years, directors remaining in their positions for the longest period are due to resign. Directors due to resign may be reappointed.

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Annual Report 2010

Management Committee

The meeting of the board of directors No. 5/2006 on June 1, 2006, made a resolution to appoint the management committee. At present such management committee has been revoked in accordance with the resolution of the meeting of the board of directors No.4/2009 on March 20, 2009.

The Audit Committee

The meeting of the board of directors No.1/2006 on Febuary 9, 2006 made a resolution to appoint an audit com-mittee consisting of :

1. Mr. Prasertphand Pipatanakul Chairperson of the audit committee 2. Lt. Seree Osathanukroh Member of Audit committee 3. Mr. Niyom Niyamanusorn Member of Audit committee

With effect on February 9, 2006, and working term of two years ending February 2008. On April 25, 2006, Lt. Seree Osathanukroh submitted his resignation from the board of director and member of audit committee. The meeting of the board of directors No.5 /2006 made a resolution on June 1, 2006 to appoint an audit committee consisting of

1. Mr. Prasertphand Pipatanakul Chairperson of the audit committee 2. Mr. Niyom Niyamanusorn Member of Audit committee 3. Mr. Trit Ophaswongse Member of Audit committee 4. Mr. Apichart Dharmasaroja Member of Audit committee

With effect on June 1, 2006, and working term of two years. Mr. Prasertphand Pipatanakul and Mr. Niyom Niyam-anusorn would complete their term in April 2009 while Mr. Trit Ophaswongse and Mr. Apichart Dharmasaroja-would complete their term in April 2010. However, Mr. Trit Ophaswongse submitted his resignation from the board of director on July 1, 2009. At present there are three audit committee members.

The Audit Committee of the Company has the scope of duties, responsibilities and shall report to the Board of Directors on:

1. Review and assure the accuracy of the Company financial reports in accordance with the generally ac-cepted auditing standard and sufficiency of data disclosure.

2. Review and assure the efficiency and effectiveness of the internal control and internal audit systems.

3. Review and assure the Company acts in compliance with rules and regulations issued by the Stock Ex-change of Thailand and related laws applicable to the Company business.

4. Consider, select and propose the appointment of Accounting Auditors and their auditing fee.

5. Review and consider the accuracy of the Company disclosure occurrence of the related transaction and the conflict of interest.

6. Prepare the report on corporate governance of the Audit Committee to be disclosed in the Company’s an-nual report. The report must be signed by Chairperson of the Audit Committee.

7. Review and provide comments pertaining to the Company related transactions with its subsidiaries in compliance with rules, regulations and related practices of the Stock Exchange of Thailand.

8. Review and assure the suitability and effectiveness of the Company’s risk management.

9. Review and provide comments on internal audit plans and internal audit operation, as well as coordinate with the Certified Public Accountant.

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Annual Report 2010

10. Provide approval of appointment, transfer and discharge, as well as consider performance and virtue of General Manager of the Internal Audit Department.

11. Report operation results of the Audit Committee to the Board of Directors at least four times a year.

12. Perform any matter as assigned by the Board of Directors, which is agreed by the Audit Committee.

If the items concern an Audit Committee member or persons who gain or lose any interest or may have conflict of interest with the Company and/or subsidiary companies, the members who are involved in any of the matter is determined to have no rights to approve the items in such matter.

Scope of authority and duty of the Chief Executive Officer

The meeting of the board of directors No.6/2006 on July 3, 2006, made a resolution to approve the authority and duty of the Chief Executive Officer to manage and supervise the business in accordance with the policy of the company and in accordance with the Memorandum of Association with scope covering but not limited to the fol-lowing authority.

1. To open/close, and deposit/withdraw from an account made with a financial institute both in the country and overseas.

2. To prepare or revoke any transaction, including a bid submitted in the bidding contest, joint venture or entering into a juristic act with binding effect on the company (the amount not exceeding 2,000 million baht per transaction) in the country and overseas, based on the portion of the responsibility value of the com-pany in the transaction as follows.

- Direct liabilities : Direct liability obligation and

- Contingent liabilities : Non-monetary obligation

3. Credit extension, registration of the mortgage or placement of any guarantee (the amount not exceeding 1,000 million baht per transaction for direct liabilities or 2,000 million baht per transaction for contingent liabilities) in the country and overseas.

4. Investment, purchase/sale of investment units (the amount not exceeding 2,000 million baht per transac-tion) in the country and overseas.

5. Investment and sale of investment in the other companies (the amount not exceeding 200 million baht) in the country and overseas.

6. Sale/purchase of fixed assets such as land, machines (the amount not exceeding 200 million baht of the book value per transaction).

7. To undertake any work assigned by the board of directors not in conflict with the rules and regulations of the Stock Exchange of Thailand and the Securities Exchange Commission Office.

The authority and assignment of the authority may be made to the suitable person excluding the authority and/or assignment of the authority to approve any transaction that he or such person may have any conflict of interest in the company or the subsidiary company in accordance with the rules and regulations of the Stock Exchange of Thailand and/or the notification of the Securities Exchange Commission and the approval on such transaction is required to be submitted to the meeting of the board of directors and/or the meeting of shareholders for examina-tion and approval on such transaction in accordance with the requirements of the company or related laws.

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Annual Report 2010

Scope of Duties and Responsibilities of the President

The Board of Director’s Meeting No. 6/2006 held on July 3, 2006 approved in principle that the president has the authority to act as the executor and the administrator for the business operation in accordance with the Compa-ny’s policies and as stipulated in Memorandum of Association covering but not limited to the following authorities:

1. To govern/manage the day-to-day running of the Company. Monitors and evaluates the Company opera-tion regularly to prevent risks from internal and external factors, and to report to the Board of Directors the operation results including the cooperation with external agencies in compliance with the law and procure-ment associated with the Company’s normal operation activities.

2. To have the authority to consider the employment of the personnel, appoint, transfer, change the em-ployee’s field of work/section/department, or dismiss the employee from his/her job, determine salaries, remunerations, bonus payments, and fringe benefits for all corporate employees.

3. To have the authority to take legal actions, withdraw charges, carry out legal executions, proceed the pro-cess of arbitration, report or withdraw complaints on criminal cases, file petitions and appeal to the bu-reaucracy, take any action to maintain the Company’s proper rights.

4. To open/close and deposit/withdraw from saving accounts with finance institutes both inside and outside of the country.

5. To undertake or cancel transactions and to bid in tendering sessions, enter into Joint-Venture agreement, perform juristic act to sign and bind the Company (with the scope of liability not over Baht 1,000 million per one deal for contingent liability) whether inside or outside of the country based on the consideration of the Company’s liability values as follows:

Direct Liabilities : burden of debts and

Contingent Liabilities : non-monetary bond

6. To apply for a credit, mortgage or put up other securities (with the scope of liability not over Baht 500 mil-lion per one deal) for Direct Liabilities and not over Baht 1,000 million per one deal for Contingent Liabili-ties whether inside or outside of the country.

7. To invest and buy/purchase investment units (not exceeding Baht 100 million per one time) both inside and outside of the country.

8. To invest and purchase investments in other companies (not exceeding Baht 100 million per one time) both inside and outside of the country.

9. To buy/ purchase permanent assets such as land and machinery (not exceeding Baht 100 million per one time according to the account cost).

10. To perform any matter as assigned by the Company’s Board of Directors in compliance with the Stock Exchange of Thailand and Securities and Exchange Commission’s regulations.

However, the authorities and authorization granted to suitable persons do not include the authorities and/or au-thorization in approving any matters that the President or any persons involved may have conflict of interest with the Company and/or subsidiary companies according to the legislation of the Stock Exchange of Thailand and/or the Securities and Exchange Commission’s announcements. Such matters are required to be presented to the Board of Directors’ meeting or the shareholders’ meeting for consideration and approval as specified by the Com-pany’s regulations or applicable laws.

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Annual Report 2010

The Management and Controlling Team

Name Position 1. Mr. Mana Karnasuta Chief Executive Officer 2. Mr. Polpat Karnasuta President 3. Mrs. Wattana Samanawong Senior Vice President of Finance and Administration Department 4. Mr. Sook Sueyanyongsiri Senior Vice President of Operation Department & Acting Vice President of Project Management 4 Department 5. Mr. Apathorn Karnasuta Senior Vice President of Procurement &Transportation Department 6. Mr. Pasan Sawasdiburi Senior Vice President of New Business & Strategic Department 7. Mr. Pinit Fukcharoenpol Vice President of Project Management 1 & Equipment Department 8. Mr. Mongkol Peerasantikul Vice President of Design Department and Project Management 5 Department 9. Mr. Nivate Ienghong Vice President of Factory Department 10. Mr. Somchai Chaithaniyachat Vice President of Estimate Department 11. Mr. Somchai Woonpresert Vice President of Project Management 3 Department 12. Miss Pakatip Lopandhsri Vice President of Finance and Accounting Department 13. Mr. Mitporn Tansrisuk Vice President of Administration Department

Directors and Executive Nomination

The Company does not have the nominating committee in which directors are nominated and voted by the share-holder’s meeting.

Personnel

As at December 31, 2010 the Company’s personnel totaled 1,638: 147 full-time engineers and 438 other month-ly-paid employees, and 1,053 workers who receive daily wages. Personnel remunerations included salaries, wages, overtimes, allowances, and bonuses totaling Baht 373 million.

The Company’s personnel development policies involve academic training, on-the-job training in the related fields, and support provided to promote further education in the fields that enhance work effectiveness.

5.3 Dividend Payment Policy

The Company has the policy on dividend payment which shall be no less than 50 percent of net profit. Subsidiar-ies and Associated Companies have not setup their dividend payment policy yet. Currently, the Criteria used in sharing profits in Joint Ventures is by way of year-by-year-deviding, or when the works have finished, or according to the Joint Venture Companies’ Consideration.

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Annual Report 2010

6. Related Party Transactions

Nawarat Patanakarn Public Company Limited had significant business transactions between subsidiary companies, associated companies, joint ventures, related party and executive as follows:

Unit : Million baht

Person/Juristic person

Type of transaction in the profit and loss

statementAmount in 2010

Amount in 2009

Amount in 2008

Balance as of December 31, 2010

RemarkTransaction in the

balance sheet Amount

1. Nawarat-A.S. Associated Joint Venture

Construction revenue

Sale revenue

-

-

-

-

-

1

Accounts receivable

Revenue not claimed for paymentLess Allowance on doubtful accounts

17

14

(9)

22

The company made an in vestment jointly with A.S Associates Engineering Co., Ltd. (1964) in the joint venture at 70:30 to construct the water tunnel from Taksin-Petchkasem Ring Road to Rama 2 Road for the Metropolitan Water Authority at 661 million baht. The project completed in January 2007 and the construction warranty period ended on August 2009.

Nawarat Patanakarn

24

Annual Report 2010

Unit : Million baht




Amount in 2009

Amount in 2008




2. Obayashi-Nawarat Joint Venture Sale revenue - 1 7 1. The company made an investment jointly with Obayashi Corporation Co., Ltd. (Bangkok Branch) at 30:70 in the joint venture to construct the underground power line for the Metropolitan Electricity Authority in conjunction with Sojitsu Corporation and Exim Corpora-tion under NEON Consortium. The project value is consisting of two currencies, 4,511 million yen 1,297 million baht. The project ended April 2009.The company manufactured and sold the pipes to the joint venture with the purchase order valued at 80 million baht.2. As of December 31, 2010, the investment in this joint venture was 16.10 million baht.

3. Joint Venture between Nawarat Patanakarn Public Co., Ltd. and Samcon Co., Ltd.

Construction revenueConstruction costInterest income

---

---

---

Accounts payable < 0.5 mil. baht

1. The company made an investment jointly with Samcon Co., Ltd. in the joint venture at 51:49 to construct the Garbage Disposal Station (new system) for Bangkok Metropolitan Administration at 619 million baht. The project was completed in July 2007.2. As of December 31, 2010, the investment in this joint venture was 15.05 million baht and allowance for diminishing in value of assets was 11.65 million baht.

Nawarat Patanakarn

25

Annual Report 2010

Unit : Million baht




Amount in 2009

Amount in 2008




4. Joint venture of Vianini Lavori S.p.a., Nawarat Patanakarn Public Co., Ltd., Vianini-Thai Construction & Development Co., Ltd.

Interest income - - < 0.5 mil. baht

The company made an investment jointly with Vianini Lavori Spa and Vianini-Thai Construction & Develop-ment Co., Ltd. in this joint venture at 99:0.5:0.5 to construct the At Narong-Ram Indra Expressway Project. The construction project was completed in 1997. During the construction, Mr.Polpat Karnasuta did not make any involvement with Vianini-Thai Construc-tion & Development Co., Ltd.. In 1999, Mr.Polpat Karnasuta had become the shareholder of such compa-ny for 305,900 shares of preferred stock or 50.98% of the total preferred stock of such company.The loan interest rate was 3.25% per year and this joint venture has not taken part in any construction project after At Narong-Ram Indra Expressway Project has been completed. This joint venture was liquidated in 2008.

5. Utility Business Alliance Co., Ltd. Construction revenue

Construction cost

Dividend income

< 0.5 mil. Baht

4

-

< 0.5 mil. Baht

4

-

-

32

4

Accounts receivable

Revenue not claimed for payment

Accounts payable

< 0.5 mil. Baht

< 0.5 mil. Baht

2

1. The company has held shares of Utility Business Alliance Co., Ltd. for 60%.2. As of December 31, 2010, the investment in this subsidiary company was 28.27 million baht.3. In November 2010, Utility Business Alliance Co., Ltd. employed the company to improve the system on the project on operaton, maintenance and management of Din Daeng Water Quality Control Plant, Phase 2, with the project value of 59.2 million baht excluding value added tax with the contract term of 6 months.

Nawarat Patanakarn

26

Annual Report 2010

Unit : Million baht




Amount in 2009

Amount in 2008




6. Meeyahta International Hotel Limited (“MIHL”)

Interest income 39 42 64 Accounts receivableShort-term loansAccrued interest incomeLess Allowance on doubtful

202358

740(1,300)

0

1. Year 1995,The company made an investment in MIHL located in the Union of Myanmar at 17% before the investment has reached 52.57% and the total investment in MIHL was sold to MIHL (Holding) Co., Ltd. in the third quarter of 2010.2. MIHL employed the company to construct the serviced apartment on the land leased from the railway Authority of the Union of Myanmar and MIHL has failed to pay the construction cost to the company.3. The loan interest rate was 6.25% per year and the loan was extended according to the portion of share-holding at the time of borrowing.

7. Myanmar NWR Company Limited Interest income 1 1 < 0.5 mil. baht

Short-term loansAccrued interest incomeLess Allowance on doubtful

142

(16)0

1. The company made an investment Myanmar NWR Company Limited at 100%.2. As of December 31, 2010, the investment in this subsidiary company was 3.01 million baht.3. The loan interest rate was 5.0 % per year.

Nawarat Patanakarn

27

Annual Report 2010

Unit : Million baht




Amount in 2009

Amount in 2008




8. Concorde Yachts International Co., Ltd.

Interest income - - - Short-term loansAccrued interest incomeLess Allowance on doubtful

5054

(104)0

1. Shareholding structure of Concorde Yachts Interna-tional Co., Ltd. consisting of: Premier Global Corporation Co.,Ltd 424,999 shares Nawarat Patanakarn Public Co., Ltd. 424,999 shares Premier International Co., Ltd. 424,999 shares Mr.Pecka Michael Coskenkeela 1,224,999 shares Mr.Suradej Boonyawattana 1 share Mr.Polpat Karnasuta 1 share Mrs. Supawan Shinkulprasarn 1 share Miss Yanisa Phanuekdee 1 shareOther shareholders have no relation to the major shareholders and the management of Nawarat Patanakarn Public Co., Ltd. 2. The loan extended is not in accordance with the shareholding portion because some companies have not sufficient fund.3. The loan interest rate was 3.25% per year.4. The company is involved in yacht building and sale and its operation has been suspended for a long time since the economic conditions have not supported the business. The company has registered its dissolution and is in the liquidation process. The company expected no debt repayment because the company has sold all assets to partially repay the debts and other shareholders which are the juristic person are being liquidated due to bankruptcy.

Nawarat Patanakarn

28

Annual Report 2010

Unit : Million baht




Amount in 2009

Amount in 2008




9. Ruen Rapee Co., Ltd. Construction revenueConstruction cost

-7

(2)6

15-

Accounts receivableLess Allowance on doubtful

Accounts payable

86(83)

32

1. Mrs. Sutasanee Karnasuta and Mrs. Sutheera Phuttharee, the younger sisters of Mr. Polpat Karnasuta, the director and President of the company are the authorized director and the shareholders of Ruen Rapee Co., Ltd.2. The main business of Ruen Rapee Co., Ltd. is real estate development business and the project handled and constructed by the company called “Barn Baranee” Project located at Klong 3, Rangsit.3. The third quarter of 2008, Ruen Rapee Co., Ltd. transferred the houses and land in “Barn Baranee” Project with value of 24.51 million baht to partially repay the debt to the company and in the second quarter of 2009, the houses and land in “Barn Baranee” Project with value of 57.48 million baht were transferred to partially repay the debt to the company.4. As of December 31, 2010, the shareholders of Ruen Rapee Co., Ltd. consisting of: Mrs. Sutasanee Karnasuta 590,998 shares Mrs. Sutheera Phuttharee 1 share Miss Benja Yiemphu 1 share

Nawarat Patanakarn

29

Annual Report 2010

Unit : Million baht




Amount in 2009

Amount in 2008




10. East Bangkok Assets Co., Ltd. Construction revenueConstruction cost

--

7-

4-


Revenue not claimed for paymentLess Allowance on doubtful

25(25)

02

(2)

0

1. Mrs. Sutasanee Karnasuta and Mrs. Sutheera Phuttharee, the younger sisters of Mr. Polpat Karnasuta, the director and president of the company are the authorized director and the shareholders of East Bangkok Assets Co., Ltd.2. The main business of East Bangkok Assets Co., Ltd. is real estate development business. There are two projects handled and constructed by the company. The first project is “De Ville” Project located at Soi Pattana Chumchon, Sri Nakharin Road and “De Siam” Project located at Soi Udomsuk, Sukhumvit Road 3. The fourth quarter of 2009, East Bangkok Assets Co., Ltd. transferred the houses and land in “De Siam” Project with value of 34.5 million baht to partially repay the debt to the company.4. As of December 31, 2010, the shareholders of East Bangkok Assets Co., Ltd. consisting of: Mrs. Sutasanee Karnasuta 399,998 shares Mrs. Sutheera Phuttharee 1 share Miss Benja Yiemphu 1 share

Nawarat Patanakarn

30

Annual Report 2010

Unit : Million baht




Amount in 2009

Amount in 2008




11. New Dacade Co., Ltd. Sale revenueConstruction cost

21

28

3161


Advance made to contractorsAccounts payable

107(107)

024

2

1. Mrs. Sutasanee Karnasuta, the younger sister of Mr. Polpat Karnasuta, the director and president of the company is the authorized director of New Dacade Co., Ltd.2. Mrs. Sutheera Phuttharee, the younger sister of Mr. Polpat Karnasuta, the director and president of the company is the authorized director and shareholder of New Dacade Co., Ltd.3. The main New Dacade Co., Ltd. construction business and has been subcontracted to undertake the construction of Koh Yor Bridge, Song Khla and subcontracted to undertake the construction of Chonburi-Pattaya Road, Section 3, from the company while some supplies could not be procured at the better conditions and price so they are procured from the company. 4. As of December 31, 2010, the shareholders of New Dacade Co., Ltd. consisting of: Mrs. Sutheera Phuttharee 220,000 shares Mr. Wasin Phuttharee 10,000 shares Mr. Satha Chavalit 10,000 shares Mr. Kantharit Thamangraksatr 20,000 shares Mr. Rangsan Boontaem 10,000 shares Mr. Kasemsuk Paisarnsrisilp 20,000 shares Miss Orthip Muangcharoen 10,000 shares

Nawarat Patanakarn

31

Annual Report 2010

Unit : Million baht




Amount in 2009

Amount in 2008




12. K Alliance Co., Ltd. Sale revenue and rental revenue

7 3 3 Accounts receivableAccounts payable

2< 0.5 mil.

baht

1. Mrs.Sutasanee Karnasuta and Mrs.Sutheera Phuttharee, the younger sisters of Mr.Polpat Karnasu-ta, the director and president of the company are the authorized director and the shareholders of K Alliance Co., Ltd.2. The main business of K Alliance Co., Ltd. is mining business. 3. The accounts receivable have been incurred since the company had repaired the machine for K Alliance Co., Ltd.

13. Italian Thai Development Public Co., Ltd.

Construction revenue - 3 5 Accounts receivableAccounts payable

5314

The company sent its employees to jointly work with Italian Thai Development Public Co., Ltd. in the Social Republic of Vietnam.

14. A.S.-Nawarat Joint Venture Construction revenueSale revenue

Interest expense

--

1

9< 0.5 mil.

Baht1

178-

< 0.5 mil. baht

Accounts receivableAccrued interest expenses

Short-term loans

141

10

1. This joint venture is formed to undertake the construction of Ua Arthorn Project of the National Housing Authority.2. As of December 31, 2010, the investment in this joint venture was 5.5 million baht.

Nawarat Patanakarn

32

Annual Report 2010

Unit : Million baht




Amount in 2009

Amount in 2008




15. InStyle Estate Park Co., Ltd. Project management chargeInterest income

15

9

10

7

9

6

Accounts receivableLess Allowance on doubtful accounts

Short-term loans and advancesLess Allowance on doubtful accounts

Accrued Interest revenue Less Allowance on doubtful accounts

45(43)

266

(19)

4725

(11)

14

The company has undertaken the construction business of residential condominium while Nawarat Patanakarn Public Co., Ltd. is employed to manage the construction project. At present, the ownership is being transferred to buyers of such residential units. The loan transaction, includes accounts receivable which have incurred from the business agreement and the company has assigned Mrs. Wattana Samanawong , the director to supervisee the disbursement of this company when the condominium is sold, the debt repayment will be received from this company.

16. NWR (Cambodia) Company Limited

Gain of sale of assets

Project management income

-

27

< 0.5 mil. Baht

-

-

-

Accounts receivable

Accounts payable

< 0.5 mil. Baht

< 0.5 mil. baht

1. This company is registered in Cambodia and is 100% owned by the company. It is involved in the business of management and supervision of the construction project.2. As of December 31, 2010, the investment in this subsidiary company was 0.02 million baht.

Nawarat Patanakarn

33

Annual Report 2010

Unit : Million baht




Amount in 2009

Amount in 2008




17. ITD-Nawarat (L.L.C.) Interest income 11 8 7 Accounts receivableLess Allowance on doubtful accounts

Short-term loans and advancesLess Allowance on doubtful accounts

Accrued Interest revenue Less Allowance on doubtful accounts

12(12)

0

195

(195)

029

(29)

0

1. It is the company jointly invested and is registered in United Arab emirates to undertake the construction work in Dubai and is 40% owned by the company.2. As of December 31, 2010, the investment in this joint venture was 0.59 million baht and allowance for diminishing in value of assets was 0.59 million baht.

18. Nawarat-Strega Joint Venture Interest expenseConstruction revenueSale revenueConstruction cost

----

-8-

< 0.5 mil. baht

-3441

Accounts receivableLess Allowance on doubtful accounts

Accrued interest income

7(6)

1<0.5

mil. baht

It is the joint venture jointly undertaken by the company and Strega Co., Ltd. with the investment portion at 80:20 to undertake the construction work on underground power line of the Metropolitan Electricity Authority with the project value of 83 million baht and the construction work was completed in January 2009.

Nawarat Patanakarn

34

Annual Report 2010

Unit : Million baht




Amount in 2009

Amount in 2008




19. C.I.N Estate Co., Ltd. Management income

Interest income

4

< 0.5 mil. Baht

4

-

4

-

Short-term loans and advancesAccrued interest income

24

< 0.5 mil. baht

1. It is the joint investment between Nawarat Patana-karn Public Co., Ltd. and Charn Issara Development Public Co., Ltd. at the portion of 40:60 to undertake the construction of a condominium at Ladprao Road between Soi 12-14 called “The Issara Ladprao” which is under the construction.2. As of December 31, 2010, the investment in this company was 100 million baht.

20. MIHL (Holding) Co., Ltd. - - - - Advances < 0.5 mil. baht

1. This company is newly formed with 100% owned by the company.2. The company sold the entire investment in Meeyahta International Hotel Limited (“MIHL”) which is a subsidiary company in the Union of Myanmar to MIHL (Holding) Co., Ltd. for 19.5 million baht and the payment has been received in full.3. In the third quarter of 2010, the company sold the entire investment in MIHL (Holding) Co., Ltd. to the third party for 20 million baht under the payment condition that the total payment is required to be received completely within three months which is due in mid-March 2011.4. As of December 31, 2010, the investment in this subsidiary was 19.5 million baht and the allowance for diminishing in value of assets was 19.5 million baht.

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Unit : Million baht




Amount in 2009

Amount in 2008




21. VSPN Property Co., Ltd. Management incomeInterest income

11

--

--

Accounts receivable

Revenue not claimed for payment

Short-term loans and advances

< 0.5 mil. baht

< 0.5 mil. baht

22

1. This associated company is 25% owned by the company to develop the residential housing units in Banglamung District, Chonburi. It is under the construction process.2. As of December 31, 2010, the investment in this as-sociated company was 25 million baht.3. The loans extended are made in accordance with the shareholding portion.

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Lending Policy Provided for future Joint Ventures

The Company’s lending policy mandates that lending providing for its future joint-ventures will only be done on necessity basis and with interest charged at the market interest rate. The Annual General Meeting No.1/1997 on April 29, 1997 approved the related party transactions concerning providing and receiving financial support be-tween the Company and its related companies according to the following detail:

The financial management of the Company and related companies is consolidated in order to maximize the use-fulness and effectiveness in terms of liquidity and ability to negotiate with financial institutions, the guideline for the Company’s providing financial support for its related companies has been determined into three categories:

1. Joint ventures which Nawarat Patanakarn Public Company Limited has the venture capital of lower than 90 percent

2. Joint ventures which Nawarat Patanakarn Public Company Limited has the investment of lower than 90 percent

3. Joint ventures and companies in categories 1 and 2 to be invested in the future

Lending is provided through promissory notes and guarantee obligation with financial obligations. Rewards take the form of interest at a rate close to that issued by leading commercial banks to their good customers. A transac-tion does not exceed 25 percent of the total assets from each three-month consolidated financial statements. The lending policy has been in use since April 1997 and will remain valid until further changes have been made.

The Company’s policy on future construction projects applied to its related companies

Projects that are contracted by the companies in the group include factory and office construction or real estate development projects. Project prices shall be appropriate market prices to ensure acceptable profit. Also, reason-able cost is assured for the client.

Construction projects tendered between the Company, its associated companies and its related companies

Independent engineers shall be appointed by the Company’s independent directors. The inspection is performed to plans and value assessment of the construction projects. Then results are reported to the Board of Directors (including independent directors) right after the particular tenders. Comments are presented in the annual report.

Summary of current related transactions

1. In case of business transactions, employments are at the market prices.

2. In case of each other’s loans, the interest rate will be according to the cost of the investment capital or in accordance with the Contract signed.

3. Collection of debts from trade accounts receivables from Subsidiaries, Joint Ventures and Related Parties will be performed as if they were general trade accounts receivables.

However, on December 26, 2006 from 1.00 pm to 4.30 pm, members of the auditing committee had a meeting to consider and discuss the Company’s related transactions as summarized below:

The Company has related transactions with its Subsidiaries, Joint Ventures, Related Companies and its execu-tives which can be divided into two main groups:

1. Business operations run and conditioned in the same way that other outside businesses are con-ditioned (which are those dealing with Subsidiaries, Joint Ventures, Related Parties and the Com-pany’s executives)

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2. Loans granted in the past before the Company’s Business Rehabilitation in 2000 to its Subsidiar-ies, Joint Ventures and Related Parties are those granted to:

2.1 Meeyahta International Hotel Limited

2.2 Myanmar NWR Company Limited

2.3 Joint Venture of Vianini Lavori S.p.A., Nawarat Patanakarn Public Company Limited, Viani-ni – Thai Construction and Development Co., Ltd.

2.4 Joint Venture of International Quality Assurance Laboratory Company Limited and Nawarat Patanakarn Public Company Limited

2.5 Concorde Yachts International Co.,Ltd.

The increased amount of loan during 2006 was from the balance of interest the Company set up in order to reserve the right to the unsettled debt outstanding--principle and interest—not from any more loan. This is for the Company to have the right to claim of debt in full amount with interests up to now. In case there is a debt settlement lawsuit, the Company will be able to exert its right to claim in full amount. In this, the Company has already recorded the reserve of doubtful debts in full amount.

In addition, the Company has filed a lawsuit to The Union of Myanmar’s Civil Court against Meeyahta International Hotel Limited to seek for its repayment of debt. As for other Subsidiaries or Joint Ventures that have stopped their business operations, the Company will take all possible actions to get those Sub-sidiaries and Joint Ventures to settle their debts (which are currently Joint Venture of Vianini Lavori S.p.A., Nawarat Patanakarn Public Company Limited, Vianini – Thai Construction and Development Co., Ltd. and Concorde Yachts International Co.,Ltd.).

For this, the auditing committee has a view that the Company has observed The Stock Exchange of Thai-land’s regulations on related transactions in relation to disclosure of data in Financial Statement and compliance with its criteria early from the initiation of each transaction.

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7. Good Corporate Governance Practice

The Board of Directors strongly believes that good corporate governance is one of the important factors that help ensure the success of the company and enable the company to grow constantly and sustainably. The Principle on Corporate Governance is therefore adopted so that company’s directors, management and employees can use it as the guidelines.

In 2010, The Company implemented the followings:

1. Rights of Shareholders and equitable Treatment of Shareholders

Shareholders are the owners of the company and control the company by appointing the Board of Direc-tors to act as their representatives. Shareholders are eligible to make decisions on any significant corpo-rate changes. Basic rights of Shareholders are: buy, sell or transfer of shares, share in profit of the com-pany, obtain relevant and adequate information on the company in a timely manner and on a regular basis, participate and vote in the Shareholders’ meeting to appoint or remove members of the Board, appoint the independent auditor, make decision of dividend payment and other matters that affect the company such as increase or decrease of capital and amendment to the company’s Articles of Association etc. The com-pany uphold the principle of equitable treatment of shareholders. All shareholders will be treated equally and fairly. The company also encourage shareholders to exercise their rights.

In 2010, The Company implemented the followings:

1.1 Organized the 2010 annual shareholders meeting at Suvarnabhumi A 2nd Floor Bangna Towers B Building, 2/3 Moo 14 Bangna-Trad Rd. Km. 6.5, Bangkaew, Bangplee, Samutprakarn, which is venue convenient to shareholders.

1.2 Distributed the notice calling for annual shareholders meeting 7 days in advance and attached with agendas and other relevant documents such as Copy of the Annual General Meeting of Sharehold-ers for the year 2009, Annual Report of the Year 2009, Profiles of directors nominated for election in replacement of those retired by rotation, The summarized biography of the Member of Audit Committee proposed option to shareholders who are unable to attend the meeting, The summa-rized biography of the auditor, Proxy Form, Articles of Association relating to the Shareholders’ Meetings, Document Verifying Entitled to Attend the Meeting, and Map of the Meeting venue.

1.3 In the proxy form, the company provided options to shareholders by providing name of the 3 audit committee members so that shareholders may select one of them as their proxies to attend the meeting and vote in the meeting.

1.4 On the day of the meeting, the company open for registration 1 hours before the meeting.

1.5 Chairperson, Chairperson of the Audit Committee, Chief Executive Officer, Member of Audit Com-mittee, President and Directors also the Management, Auditor and Legal Advisor attended the

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meeting and listen to the opinions of shareholders on various issues.

1.6 Before the meeting, in accordance with the agendas stipulated in the notice calling for the meeting. Chairperson of the meeting had informed shareholders regarding the procedure of the meeting and the voting method for each agenda, which approved unanimously by the shareholders.

1.7 Chairperson of the meeting had run the meeting in accordance with the agendas stipulated in the notice calling for the meeting. Provided equal opportunities to shareholders to check the company’s performance as well as ask, give opinions and provide recommendations. The company had writ-ten down all the major points in the minutes of meeting so that shareholders can investigate them accordingly.

1.8 Voting is by way of one-share one- vote rule. Provided there is not any objection or abstention, shareholders will be taken as approving the resolution proposed. If any shareholder desires to object, disagree, or vote for no vote, he will be advised to use the ballot provided by the Company. In casting a shareholder’s vote, each of his shares will represent one vote. However, in finding the result, only the number of votes for disagreement and/or abstention (sent in writing) will be sub-tracted from all votes present at the meeting. As for the shareholders who issue a letter of attorney to have someone else attend the meeting but choose to cast his vote in the shareholder-own- inten-tion system, the Company will put their votes(whether for agreement, disagreement and/or absten-tion depending on their own intention) into its database for one such regular resolution.

1.9 On the agenda appointing directors to replace those who retired by rotation, the company provided opportunity to shareholders to elect directors on individual basis.

1.10 No other agendas are considered in addition to those stipulated in the notice calling for the meet-ing.

1.11 On January 29,2010, the company had sent a letter to the Stock Exchange of Thailand as well as posted the information on the company’s website, informed the shareholders that the company has provided opportunity to shareholders to add agendas for the meeting also provided opportunity to shareholders to nominate suitable persons to be elected as the company’s directors in accordance with the company’s procedure (see details in the company’s website at www.nawarat.co.th)

1.12 The company had prepared the minutes of shareholders’ meeting covered all the major points cor-rectly and accurately. The company forwarded the minutes of meeting to the Stock Exchange of Thailand as well as disclosed the minutes of meeting on the company’s website within 14 days after the date of the meeting.

The company has policy to disclose correct and accurate information constantly and on time. The company had disclosed information and other company’s news to shareholders, investors and other people who are interest in the above-mentioned through various channels provided by the Stock Exchange of Thailand and through the company’s website www.nawarat.co.th. In addition, the company has established the Investor Relation office in order to communicate with shareholders, investors and other people who are interested in above-mentioned.

2. Roles and Rights of Stakeholders

Stakeholders of the company will be treated fairly in accordance with their legal rights as specified in rel-evant laws. The Board of Directors will not do anything in violation of Stakeholders’ legal right. Stakehold-ers include, but are not limited to shareholders, employees, customers, suppliers, competitors, indepen-dent auditors and community in the neighborhood of the company, etc.

3. Guidelines relative to Employees

The company strongly believes that employees are the most valuable resources of the company, it there-

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fore encourage employees to learn and develop their skills continuously. The company has provided fair and suitable remunerations to employees by comparing with other companies that have similar size and similar nature of business. Besides, The Company has provided sufficient welfares to employees that re-flect the current circumstances.

In 2010, The Company had implemented the followings for the employees:

3.1 In addition to salaries and bonuses that the company paid to the employees which close to those paid by other companies with similar size and similar nature of business, the company has ar-ranged to have the Provident Fund, Nawarat Patanakarn Saving and credit Cooperative Limited., Medical treatment fee, Country Allowance, Foreign Allowance, Uniform, Life Assurance and Acci-dent Insurance as well as the annual Physical Check up for all employees.

3.2 The company had jointly worked with Government Housing Bank Limited and Government Savings Bank Limited (Sai Thong Loans) provided a residential credit to the employee of which the privi-leges are better than that of the personal loan so the employees are able to acquire their own residence.

3.3 Privileges on holidays and financial assistance in case that the employee’s father-mother has passed away.

3.4 Daily bus service for the employees and vehicles for employees in some positions at the construc-tion site and head office.

3.5 Residential welfare for employees, including free electricity and running water for employees at the construction site.

3.6 The company had organized various training courses to improve knowledge and skill of the em-ployees in order to improve the competitive potentiality. Form of training courses also in house training and send employees to training center. In 2010, there are total employees of 1,661 and total training hour 10,629.50

3.7 The company had organized the Orientation Course to all new employees so that they know the policy, culture of the company and operating practices.

4. Guidelines relative to Independent Auditors

The company realizes the importance of the Independent Auditors as the key mechanism of shareholders in auditing the Management’s performance and to ensure that financial reports are correct and accurate and has given full supports to the Independent Auditors by providing them correct and accurate informa-tion, as well as providing them convenience during their auditing process. The financial reports of the company including the 2010 annual reports have certificated by the Independent Auditor. The financial reports are unqualified (clean report)

5. Disclosure and Transparency

The company realizes the importance to pay attention to the disclosure and transparency with regard to the corporate governance, in 2010, the company had disclosed information both the financial information and other information correctly, accurately, transparently and on time, in accordance with the regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand as follows:

5.1 Had forwarded the financial reports and other reports to Securities and Exchange Commission and Stock Exchange of Thailand within the given time set forth by them.

5.2 Had disclosed the financial status and other information such as nature of business, business risk, the number of security of the company held by each director, the connected transactions and Good

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Corporate Governance Practice. etc. in the annual report and in the Form 56-1

5.3 Had disclosed the financial information and other information correctly and accurately in the com-pany’s website www.nawarat.co.th

5.4 The company has established the Investor Relations office so that shareholders and other persons can contact at

Mr.Vajraput Vajrabhaya and Mr.Pratya Mankong Tel : 02-730-2100 ext.2178 Fax : 02-751-9484 E-mail : [email protected]

5.5 The Board of Directors had selected the Independent Auditors who are independent and have no conflict of interests with the company and the Auditors have been approved by Securities and Ex-change Commission. The company has appointed the auditors from Ernst & Young Office Limited. As the company’s auditor for the year 2010 ( who were the company’s existing auditor) as recom-mended by the Audit Committee as follows: Ms. Siraporn Uranantakul C.P.A. License No. 3844 and/or Mr. Supachai Panyawatno C.P.A. License No. 3930 and/or Mr.Termphong Opanaphan C.P.A. License No. 4051 The audit fee for year 2010 of not exceed 1,950,000 Baht

5.6 The Company audited financial reports have been certified by the Independent Auditor and the fi-nancial reports are unqualified (clean reports)

5.7 The company has adopted the safeguard and investigation system for the use of internal informa-tion for inappropriate personal gain. All directors and management must report the changes in holding of the company’s securities to the Securities and Exchange Commission. All directors, management and the employees involved in the internal information are prohibited to disclose such information to outside people or people whose job are not involved with the information. Also, all directors, management and employees involved in the preparation of the financial reports are pro-hibited to sell or buy the company’s securities before the information is disclosed to the public.

6. Internal control and Risk management

The company has paid attention to the internal control and risk management system. The company has set up the Internal Audit Department, reported directly to the Audit Committee as a mechanism to reinforce the internal control system and the internal audit system as well as to follow up and ensure that there is improvement and correction of the flaws found from the audit to improve the efficiency and reduced risk from the operation.

The Company has policy on risk management for various matters such as financial risk management, credit risk, Interest rate risk and foreign currency risk etc. The company has also implemented the group accident insurance, group life assurance and medical insurance for the employees.

7. Responsibilities of the Board

The Board of Directors is responsible to shareholders in carrying out the company’s business in compli-ance with the laws and regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand, the objective and articles of association of the company as well as the resolutions of share-holders meeting. The Board of Directors shall perform duties in good faith, with due diligence and care, and for the best interest of the company and shareholders.

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Annual Report 2010

In 2010, the Board of Directors has performed its duties as follows:

7.1 Leadership and Vision

The Board of Directors has participated in the adoption of the company’s strategic direction and annual operating budget including to oversee and control the management to operate the company in accordance with the policy and business plan to increase wealth of the company and grow the business constantly and sustainably. In addition the Board of Directors has established the Audit Committee to oversee the financial reports, internal control system, risk management system, the selection of independent auditor and oversee that the company has operated business in compli-ance with relevant laws and regulations.

7.2 Board Structure and Qualification

7.2.1 The Board of Directors comprised of 8 members; 4 executive directors, 4 independent di-rectors.

7.2.2 The Board has 4 independent directors which is more than 1/3 of total directors. Out of the 4 independent directors, 3 are Audit Committee members.

7.2.3 The Chairperson and the Chief Executive Officer is not the same person.

7.2.4 The vacating directors may be eligible for-election.

7.2.5 The executive directors must not be the directors in other public companies more than 5 companies. The holding of directorship in other companies mentioned above must be in-formed to the Board and approved by the Board.

7.2.6 No director is allowed to be the partner or director of other companies which have similar-business and operate the business in competition with the company accepted that the mat-ters were informed to have shareholder’s meeting before the person was appointed to the company’s director.

7.2.7 Every director should understand comprehensively the duties and responsibilities of the company director and the nature of business of the company as well as shall express their opinions independently. The director should also dedicate time and effort in carrying out the duties to reinforce the position of the Board of Directors.

7.3 Definition and Qualification of Director

7.3.1 Executive Director is an executive who is appointed as a member of the Board of Directors. The Executive Director must be knowledgeable and understand the business of the com-pany and must not be a person who is prohibited to be company’s director by law, or regula-tions of the Securities and Exchange Commission or the Stock Exchange of Thailand.

7.3.2 Non-executive director is a director who has no position in the company’s management team. The Non-executive Director must have skills, experience and expertise that are useful to the company. And must meet the following qualification outlined by the Securities and Exchange Commission or the Stock Exchange of Thailand.

7.3.3 Independent Director is a director who has no position in the company’s management team and must meet the following qualification outlined by the Securities and Exchange Commis-sion and the Stock Exchange of Thailand detail as following:

- Hold company shares of not more than 5% of the company’s paid up capital, or of those of the company’s customers, suppliers, trade creditors, loan creditors or loan debtors etc. They must also have no benefits or interests directly or indirectly with regard to financial

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Annual Report 2010

and management of the company, the subsidiaries, the affiliates or the associates in such a way to make them less independent.

- Must not be the management, employees or advisors who receive regular compen-sation from the company, or personal advisors of the person who control the company, the subsidiaries, the affiliates or the associates. They must not have benefits or interests men-tioned above for a period of not less than 3 years.

- Must have no business relation with the company, such as the customers, suppliers, trade creditors, loan creditors or loan debtors etc. They must also have to benefits or inter-ests directly or indirectly with regard to financial and management of the company, the subsidiaries, the affiliates or the associates in such a way to make them less independent.

- Must not be relatives or other connected persons which may make them less inde-pendent with the management or major shareholder of the company, the subsidiaries, the affiliate or the associates, including person who are representatives of the management or major shareholders.

7.4 Board of Directors’ Meeting

The Board of Directors has had regular meeting every month and may have additional meeting when it is necessary. In every meeting the Board had clearly fixed the agenda and had sent the notice calling for the meeting more than 7 days in advance so that the Board of Directors shall have sufficient times to study the information. Minutes of meeting had been written correctly and accu-rately, and the minutes of meeting that certified by the Board had been kept properly so that the Board of Directors and other involved persons can investigate them accordingly.

In 2010, The Board of Directors had 12 meeting and each meeting took approximately 2 hours.

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7.5 Directors’ Remuneration

The company had paid out the remuneration to directors in 2010 as follows:

Name

Board of Directors Audit Committee

Number of month to get paid

Total amount of Remunera-

tion (Baht)Position

Remunera-tion/month

(Baht) Position

Remu-neration/

month (Baht)

Mr.Poapat Javanalikikorn Chairperson 42,000.00 12 504,000.00

Mr.Prasertphand Pipatanakul Director 26,250.00 Chairperson 21,000.00 12 567,000.00

Mr.Niyom Niyamanusorn Director 26,250.00 Director 13,125.00 12 472,500.00

Mr.Apichart Dharmasaroja Director 26,250.00 Director 13,125.00 12 472,500.00

Mr.Mana Karnasuta Director 26,250.00 7 183,750.00

Mr.Polpat Karnasuta Director 26,250.00 12 315,000.00

Mrs.Wattana Samanawong Director 26,250.00 12 315,000.00

Mr.Sook Sueyanyongsiri Director 26,250.00 12 315,000.00

Total amount of Remuneration for Committee in the year 2010 3,144,750.00

Note : Mr. Mana Karnasuta resigned as a director from the date of July 20, 2010

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8. Report from Board of Directors Relative to Financial Reports

The Board of Directors is responsible for the company’s financial reports and the details therein. The financial reports are prepared in accordance with the generally accepted accounting standards in Thailand, by adopting the appropriate accounting policy and consistent implementation as well as due judgment and best estimation in the financial reports preparation, including the sufficient note and explanation of the financial reports. In addition, The Board of Directors has overseen that the company’s internal control system and risk management system are appropriate and efficient to ensure that the financial reports are correct, accurate and sufficient to safeguard the company’s assets as well as to protect frauds.

The Board of Directors has appointed the Audit Committee to oversee and review the company’s accounting policy and the accuracy of the financial reports, including the review of the company’s internal control system and internal audit system, the details of which can be seen from the Audit Committee’s Report included in the annual report. In addition the company’s financial reports were audited by the independent auditor, Ernst & Young Office Limited. The report of the independent auditor is included in the annual report.

The Board of Directors has the opinion that the company’s internal control system in general is satisfactory and can be assured that the financial reports of Nawarat Patanakarn Public Company Limited and it’s subsidiary for the year ended December 31, 2010 are accurate and fairly presented, as well as in compliance with relevant laws and regulations.

(Mr. Poapat Javanalikikorn)

Chairperson

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9.Audit Committee Report Year 2010

The Audit Committee of Nawarat Patanakarn Public Company Limited is comprised of 3 independent directors and all the member of the Audit Committee are not the management or the advisors of the company.

1. Mr.Prasertphand Pipatanakul Chairperson of the Audit Committee 2. Mr.Niyom Niyamanusorn Member of Audit Committee 3. Mr.Apichart Dharmasaroja Member of Audit Committee

The Audit Committee has performed its duties and responsibilities as assigned by the Board of Directors and in accordance with the good practices for the Audit Committee of the Stock Exchange of Thailand.

In 2010, The Audit Committee has 12 meeting for various matters. The top management, the Internal Audit Man-ager and the Auditor has participated in the discussion of relevant agendas. The meeting for review of annual fi-nancial statement is one in which there are none of the Company’s executives involved. Performance of the Audit Committee can be summarized as follows:

1. The review of quarterly financial reports and annually financial report for the year 2010, the financial re-ports and fairly presented. The information disclosure is adequate and reliable and in accordance with the general accepted accounting standards, the connected transactions between the company and its subsid-iary has also properly been disclosed to ensure that they has been done in accordance with normal busi-ness transaction and in compliance with the criteria of the Stock Exchange of Thailand before forwarding them to Board of Directors for consideration.

2. The oversight of the internal control, the Audit Committee review with the Internal Audit Manager and has established audit plan that are suitable to the circumstance in order that the internal control is good, well-covered and suitable to the operating process. The Audit Committee has reviewed the investigating results and followed up the implementation as planed to protect or reduce possible risk as well as review regu-larly the performance of the Internal Audit Manager. The Audit Committee is of the opinion that the internal audit system is appropriate and efficient.

3. The review of the compliance with the Securities and Exchange Commission’s laws and other relevant laws, The Audit Committee had a meeting with the Company Secretary who oversees and follows up the compliance of the company with the laws, rules and regulations of the Securities and Exchange Commis-sion. The Audit committee is of the opinion that the company has operated the business in compliance with relevant laws and no material flaws are found.

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Annual Report 2010

4. The consideration of nomination of Auditor, the Audit committee has nominated for shareholder’s approval:

1. Ms. Siraporn Uranantakul C.P.A. License No.3844 and/or 2. Mr.Termphong Opanaphan C.P.A. License No.4501 and/or 3. Mr. Khitsada Lerdwana C.P.A. License No.4958 Ernst & Young Office Limited. As the company’s Auditor for the year 2011

(Mr.Prasertphand Pipatanakul)

Chairperson of the Audit Committee

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10. Explanation and Verification of Financial Position and Operation Results

10.1 Summary of the auditing report

Financial Statement 2010

The auditor has provided an unqualified opinion in the auditor’s report with remark on the dispute with Meeyahta International Hotel Limited (“MIHL”) as follows.

MIHL is a subsidiary company in the Union of Myanmar with total shareholding of 53%. MIHL entered into a land lease agreement with the Railway Authority of the Union of Myanmar for the lease term of 30 years (starting 1999) with renewal condition for another 10 years at the expiry of the agreement. In 2001, MIHL started its business after a certain delay due to the poor economic conditions. MIHL incurred a large amount of operating loss and the retained losses have been much greater than its capital.

As the investment conditions of such project have required MIHL to transfer ownership in such project to the concession provider at the expiry of the long-term lease with land rental charge at US$910,152 per year. Such rental charge is subject to change every 5 years with additional charge per year of US$35,000 plus 2% of the revenue before deduction of expenses of the project. As of December 31, 2010, MIHL incurred the obligation to pay the rental charge at US$19 million according to such lease agreement.

In 2007, MIHL received a letter of termination of the land lease agreement from the government of the union of Myanmar for non-compliance with the agreement in relation to the improvement to the building and accrued land rental charge since 1998 until 2008 for about US$10 million. To look after the interest of the joint creditor and to postpone the termination of the agreement, the company has taken a legal action against MIHL to repay the con-struction cost of such project and the case has already been decided by the primary court of the Union of Myan-mar that the company would receive all construction costs. If MIHL in unable to repay the debts in accordance with the court decision, the court has order to put the hotel building of MIHL under an auction to obtain the pay-ment to repay the debts to the company.

Besides, in 2007, a small shareholder of MIHL made a letter to inform the company that the company has de-faulted the joint venture agreement and has a suit against the company for transfer of share ownership in MIHL to such small shareholder. The case is being under the examination of the primary court of the Union of Myanmar.

Financial Statements 2009:

The auditor has provided an unqualified opinion in the auditor’s report with remark on the dispute with Meeyahta International Hotel Limited (“MIHL”), a subsidiary company in the Union of Myanmar, similar to the remark pro-vided in the auditor’s report of 2010 above. As of December 31, 2009, the case that the company had charged MIHL to repay the construction cost, is being examined by the primary court, the Union of Myanmar.

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Annual Report 2010

The auditing company for the financial statements of the years 2009 and 2010 Is Ernst & Young Office Limited: Mr.Supachai Panyawattano register no. 3930. The Company auditing expenses for the years 2009 and 2010 totaling 1.95 million per year.

10.2 Explanation and Verification of Financial Position and Operation Results

Since 1997 the country’s economy has been suffering from the Baht depreciation and reduced economic growth. The construction contracting business has been dramatically impacted. Although in 2000 the economy seemed to improve, exchange rates became stable, and interest rates tended to reduce, there was still no clear sign of recovery. Liquidity was lacking, as financial institutions did not offer enough sufficient credits. On November 30, 2000, the Company entered into the debt restructuring agreement with its financial institution creditors. This re-lieved its debt and interest obligations. The corporate capital structure was restructured by the financial institution creditors. Part of the loans was novated as capital. The debts were partially reduced. The debt restructuring al-lowed the Company to have suitable financial structure facilitating its future operation. Still , the Company faced the problem of liquidity again in 2004 making it unable to repay the final amount of debt to financial institution creditors according to the business rehabilitation plan. The Company Then filed an application for amendment of the business rehabilitation plan and managed to clear off its debt and redeemed the convertible debentures be-fore the due date. The Central Bankruptcy Court ordered an end to business rehabilitation on November 14, 2005.

In 2009, the world’s and domestic economic situation gradually recovered. In the second quarter of 2009, the rise of world oil as well as steel-type, main material prices were turning back again. Up until now, oil and steel prices have increased by 40 and 20 percent respectively. Besides, the problematic political situations within the country have had an effect on its economic growth as well.

In 2010, the domestic political condition has severely affected domestic growth, including natural disaster in-curred to Thailand and other countries around the world.

Explanation of Financial Position and Operation Results for the Year Ended December 31, 2010 Summary of Financial Position Based on Consolidated Financial Statement

As of December 31, 2010, the total assets of the company registered at 5,608.37 million baht, an increase of 1,039.7 million baht or 22.76% from that of December 31, 2009.

Major changes in assets consisting of:

1. Non-related accounts receivable before deduction of allowance for doubtful accounts as of December 31, 2010, were 1,637.23 million baht, an increase of 163.41 million baht from that if December 31, 2009, with significant changes in three accounts receivable as follows.

1. NWR-SBCC Joint Venture for the project of excavation and removal of earth and coal project at Mae Moh mine, Contract No. 6 Mae Moh Mine of the Electricity Generating Authority of Thailand, Mae Moh District, Lampang. The accounts receivable as of December 31, 2010 were 120.92 mil-lion baht (according to the investment portion at 50%), an increase of 49.15 million baht from that of December 31, 2009.

2. PTT Public Co., Ltd. for the project on design and construction of the waste water treatment system for gas separation plant at Mab Ta Phut. The accounts receivable as of December 31, 2010 were 172.05 million baht, an increase of 163.46 million baht from that of December 31, 2009.

3. GS Engineering & Construction Corporation for “Jetty Development and LNG Receiving Terminal Project”. The accounts receivable as of December 31, 2010 were 77.52 million baht while there was no outstanding balance on December 31, 2009.

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2. Accounts not claiming for payment before deduction of allowance for doubtful accounts as of December 31, 2010 were 550 million baht, an increase of 269.29 million baht from that of December 31, 2009 due to the construction project waiting for the delivery. There are two projects which have generated large in-comes but have not claimed for the payment.

1. Project on design and construction of the waste water treatment system for gas separation plant at Mab Ta Phut of PTT Public Co., Ltd. of which incomes have not been claimed for 139.44 million baht as of December 31, 2010 while there was no incomes to be claimed as of December 31, 2009.

2. “Theun Hinboun Expansion Project” in the People Democratic Republic of Laos, which is subcon-tracted to the company by Cooperativa Muratori & Cementisti – C.M.C. Di Ravenna of which in-comes have not been claimed for 167.02million baht as of December 31, 2010 while there was no incomes to be claimed as of December 31, 2009.

3. Short-term loans and advances provided to related companies before deduction of allowance for doubtful accounts as of December 31, 2010 were 377.58 million baht compared with 273.38 million baht as of December 31, 2009, an increase of 104.20 million baht with details as follows.

(Unit : Million Baht)

As of 31/12/2010 As of 31/12/2009 Additional loans in 2010

ITD- Nawarat (L.L.C.) 134.48 102.79 31.69

InStyle Estate Park Co., Ltd. 91.77 65.88 25.89

Concorde Yachts Interna-tional Co., Ltd.

104.41 104.71 -0.30

C.I.N Estate Co., Ltd. 24.33 - 24.33

VSPN Property Co., Ltd. 22.21 - 22.21

Other 0.38 - 0.38

Total 377.58 273.38 104.20

4. Land, Buildings and equipment were acquired during the year at the cost of 1,098.61 million baht, mostly an acquisition of NWR-SBCC Joint Venture to undertake the excavation and removal of earth and coal project, Contract No.6 at Mae Moh mine of the Electricity Generating Authority of Thailand, Mae Moh District, Lampang. The additional purchase during the year was 892.33 million baht (according to the investment portion of 50%).

5. Land to be developed and to be sold The company has transferred two plots of the land to be developed in Samui island, Surat Thani and Mae Rim District, Chiangmai at the cost of 125.24 mil-lion baht to the land to be sold because there is no development plan.

Major changes in liabilities consisting of:

1. Account payable consisting of:

1. Non-related accounts payable as of December 31, 2010 were 745.44 million baht, an increase of 179.85 million baht from that of December 31, 2009.

2. Related accounts payable as of December 31, 2010 were 352.24 million baht, an increase of 229.39 million baht from that of December 31, 2009.

2. Other current liabilities-other creditors as of December 31, 2010 were 501.20 million baht, an increase of 464.09 million baht from that of December 31, 2009 due to account payable for purchase of heavy machin-ery and equipment of NWR-SBCC Joint Venture to undertake the excavation and removal of earth and coal project, Contract No.6 at Mae Moh mine for 463.81 million baht as of December 31, 2010 (according

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to the investment portion of 50%), an increase of 461.75 million baht from that of December 31, 2009.

Explanation of Financial Position and Operation Results for the Year Ended December 31, 2009 Summary of Financial Position Based on Consolidated Financial Statement

As of December 31, 2009, the Company’s total assets amounted to Baht 4,568.68 million, an increase by Baht 1,453.94 million from the date of December 31, 2008, equaling 46.68 percent.

Major Changes in Assets

1. The value of Trade Accounts Receivables-Unrelated Parties- as of December 31, 2009 was equal to Baht 1,473.82 million, an increase by Baht 108.16 million from December 31, 2008. As of December 31, 2009, there was an appearance of Trade Accounts Receivable balance from NWR-SBCC Joint Venture amount-ing to Baht 71.77 million(according to 50% investment proportion), from the Contract Work of excavating and transporting soil and coal at Maemoh mine, Contract 6 made at Maemoh mine, of Maemoh District, Lampang Province, employed by EGAT, commencing in 2009.

2. The value of Trade Accounts Receivables-Related Parties- as of December 31, 2009 was equal to Baht 386.76 million, a decrease by Baht 91.49 million from December 31, 2008. The Company received debt repayments through transferring of assets from 2 debtors to be named below:

1. Ruen Rapee Company Limited paid off its debt by making transfers of assets, a total of 46 deeds of lands and buildings, amounting to Baht 42.91 million during the third quarter of 2009.

2. East Bangkok Assets Company Limited paid off its debt by making transfers of 50 deeds of lands to settle a debt of Baht 34.50 million during the fourth quarter of 2009.

3. Outstanding merchandise as of December 31, 2009 was in the amount of Baht 470.08 million, a decrease by Baht 129.24 million from December 31, 2008. Near the end of 2008, there was a fluctuation in steel price, so the Company avoided the risk by stockpiling it. However, because some steel was brought out to use for construction throughout 2009 the outstanding balance for materials was decreased toward the end of 2009.

4. There were, during the year, purchases of land, buildings, and equipments at cost prices mostly by NWR-SBCC Joint Venture to supply the Project of excavating and transporting soil and coal at Maemoh mine, as per Contract 6 made for Maemoh mine, of Maemoh district, Lampang Province, employed by EGAT, with the buying value added during the year totaling Baht 1,319.74 million(according to 50% investment proportion).

5. Real Estates pending sale as of December 31, 2009 amounted to Baht 205.74 million, an increase by Baht 131.37 million. The Company received 3 items of land and building transfers as follows:

1. a total of 46 deeds of land and building from Ruen Rapee Company Limited to settle a debt of Baht 42.91 million in the third quarter of 2009

2. a total of 50 deeds of land from East Bangkok Assets Company Limited to settle a debt of Baht 34.50 million in the fourth quarter of 2009(The Company itself paid for the transfer fee of Baht 1.20 million; therefore, the land value pending sale is equal to Baht 35.70 million.)

3. a transfer of 30-1-88 rai of land in Samutsakon Province valued Baht 30.47 million in exchange for all of the investment money in Sarin Property Company Limited which the Company was holding

Major Changes in Debts

1. Bank Overdrafts and short-term loans from financial institutions as of December 31, 2009 amounted to Baht 408.07 million, an increase by Baht 145.67 million.

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2. The value of Trade accounts payable-related parties as of December 31, 2009 was in the amount of Baht 122.85 million, an increase by Baht 101.02 million.

3. Long-term loans from banks as of December 31, 2009 amounted to Baht 1,104.40 million, the 120-million-baht portion due within one year included.

The above-mentioned 3 items of debts are major changes resulting from NWR-SBCC Joint Venture(according to 50% investment proportion), the Contract Work of excavating / transporting soil and coal at Maemoh mine, Con-tract 6 made for Maemoh mine, of Maemoh district, Lampang Province, employed by EGAT. This Project was commenced in 2009 and supported by long-term loans from banks with the purpose of setting up a fund for buy-ing and repairing equipments, with 7-year loan term being repaid in installments(72 monthly installments com-mencing on May 31, 2010 and finalizing on April 30, 2016).

Nawarat Patanakarn Public Company Limited, its subsidiaries and its jointly controlled entities

Report and consolidated financial statements 31 December 2010 and 2009

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Report of Independent AuditorTo the Shareholders of Nawarat Patanakarn Public Company Limited

I have audited the accompanying consolidated balance sheets of Nawarat Patanakarn Pub-lic Company Limited, its subsidiaries and its jointly controlled entities as at 31 December 2010 and 2009, the related consolidated statements of income, changes in shareholders’ equity and cash flows for the years then ended, and the separate financial statements of Nawarat Patanakarn Public Company Limited for the same periods. These financial state-ments are the responsibility of the Company’s management as to their correctness and completeness of the presentation. My responsibility is to express an opinion on these finan-cial statements based on my audits. I did not audit the financial statements for the years ended 31 December 2010 and 2009 of certain subsidiaries and jointly controlled entities. The consolidated financial statements included total assets of these subsidiaries and jointly controlled entities of Baht 2,531 million, total revenues of Baht 1,262 million and net loss of Baht 53 million (2009: Baht 1,860 million, Baht 676 million and Baht 12 million, respectively). The financial statements of these subsidiaries and jointly controlled entities were audited by other auditors whose reports have been furnished to me. My report insofar as they relate to these subsidiaries and jointly controlled entities are based solely on the reports of those other auditors.

I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes exam-ining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement pre-sentation. I believe that my audits and the reports of other auditors referred to in the first paragraph provide a reasonable basis for my opinion.

In my opinion, based on my audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Nawarat Patanakarn Public Company Limited, its subsidiaries and its jointly controlled entities, and of Nawarat Patanakarn Public Company Limited as at 31 December 2010 and 2009, the re-sults of their operations and cash flows for the years then ended, in accordance with gener-ally accepted accounting principles.

Without qualifying my opinion on the above financial statements, I draw attention to a dispute of an overseas subsidiary as described in Note 15 to the financial statements.

Supachai Phanyawattano Certified Public Accountant (Thailand) No. 3930

Ernst & Young Office Limited Bangkok: 25 February 2011

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Balance sheetsas at 31 December 2010 and 2009

(Unit: Baht)

Consolidated financial statements

Separate financialstatements

Note 2010 2009 2010 2009

Assets

Current assets

Cash and cash equivalents 6 135,358,345 205,756,151 59,503,010 118,522,509

Trade accounts receivable - unrelated parties, net 7 631,560,743 449,582,478 469,977,299 313,529,048

Trade accounts receivable - related parties, net 7,8 80,475,560 100,693,532 82,062,799 123,660,700

Unbilled receivables - net 7 536,645,859 268,676,351 445,886,544 200,000,419

Retention receivables - net 133,420,981 184,540,798 93,662,737 140,982,782

Short-term loans and advances to related parties - net 8 243,161,401 164,851,489 108,611,489 62,069,528

Loans to venturer 9 11,136,639 10,607,927 - -

Inventories - net 10 411,234,937 454,372,111 376,389,791 444,824,367

Other current assets

Withholding income tax 52,427,463 66,406,921 46,643,210 61,647,421

Advance payment 32,963,669 46,232,039 32,963,669 46,232,039

Prepaid expenses 37,106,142 24,968,488 31,445,642 19,091,336

Value added tax refundable 22,431,973 96,512,507 1,555,425 36,370

Others 92,130,869 71,744,322 14,338,617 16,968,656

Total current assets 2,420,054,581 2,144,945,114 1,763,040,232 1,547,565,175

Non-current assets

Restricted bank deposits 20 112,514,210 91,023,369 92,630,790 73,426,891

Investments in subsidiaries - net 11 - - 31,296,663 19,296,673

Investments in joint ventures - net 12 - - 24,990,496 33,412,470

Investments in associates 13 115,267,655 85,853,628 124,999,596 123,999,596

Other long-term investments - net 14 20,160,915 20,227,217 20,160,915 20,227,217

Hotel, apartment building and equipment - net 15,25 11,799,631 56,172,758 - -

Property, plant and equipment - net 16,20 2,524,255,181 1,784,067,663 535,710,068 480,547,609

Other non-current assets

Leasehold right for land - net 17 25,438,954 28,025,950 25,438,954 28,025,950

Property awaiting sale 18,20 207,822,409 205,744,679 207,822,409 205,744,679

Land awaiting development 19 21,910,532 139,829,688 21,910,532 139,829,688

Land awaiting sale 19 125,240,537 - 125,240,537 -

Others 23,906,514 12,785,941 10,939,890 11,395,232

Total non-current assets 3,188,316,538 2,423,730,893 1,221,140,850 1,135,906,005

Total assets 5,608,371,119 4,568,676,007 2,984,181,082 2,683,471,180

The accompanying notes are an integral part of the financial statements.

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Annual Report 2010


Balance sheets (continued)as at 31 December 2010 and 2009

(Unit: Baht)



Note 2010 2009 2010 2009

Liabilities and shareholders' equity

Current liabilities

Bank overdrafts and short-term loans

from financial institutions 20 360,143,149 408,072,815 260,771,236 246,136,399

Trade accounts payable - unrelated parties 745,440,638 565,587,689 571,271,664 366,697,665

Trade accounts payable - related parties 8 352,239,363 122,850,727 36,448,391 36,873,617

Current portion of long-term loan from bank 21 177,972,154 120,000,000 - -

Short-term loans and advances from related parties 8 118,909,222 109,016,965 10,624,392 246,297

Advance received from construction 273,961,679 276,265,529 272,536,076 274,565,782

Deposit for share subscription 11 10,000,000 - 10,000,000 -

Other current liabilities

Accrued expenses 233,449,355 242,469,260 24,834,656 14,641,549

Output tax suspend 109,447,151 97,593,610 100,845,826 89,095,091

Other accounts payable 501,200,640 37,112,957 37,946,318 35,051,399

Others 50,817,678 43,157,277 15,455,192 22,211,483

Total current liabilities 2,933,581,029 2,022,126,829 1,340,733,751 1,085,519,282

Non-current liabilities

Long-term loan from bank, net of current portion 21 990,349,305 981,403,513 - -

Retention payables 57,734,134 61,780,384 54,155,814 58,506,274

Other non-current liabilities 57,250,277 10,757,741 13,510,472 10,757,741

Total non-current liabilities 1,105,333,716 1,053,941,638 67,666,286 69,264,015

Total liabilities 4,038,914,745 3,076,068,467 1,408,400,037 1,154,783,297


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Balance sheets (continued)as at 31 December 2010 and 2009

(Unit: Baht)



Note 2010 2009 2010 2009

Shareholders’ equity

Share capital 22

Registered

2,217,950,679 ordinary shares of Baht 1 each

(31 December 2009: 3,149,691,424 ordinary shares of Baht 1 each) 2,217,950,679 3,149,691,424 2,217,950,679 3,149,691,424

Issued and fully paid

1,552,901,243 ordinary shares of Baht 1 each

(31 December 2009: 2,484,641,988 ordinary shares of Baht 1 each) 1,552,901,243 2,484,641,988 1,552,901,243 2,484,641,988

Translation adjustment 95,544,288 95,371,219 - -

Retained earnings

Appropriated - statutory reserve 22 4,650,658 50,000,000 2,354,658 50,000,000

Unappropriated (deficit) (129,655,632) (1,161,020,202) 20,525,144 (1,005,954,105)

Equity attributable to the Company’s shareholders 1,523,440,557 1,468,993,005 1,575,781,045 1,528,687,883

Minority interest - equity attributable to minority shareholders of subsidiaries 46,015,817 23,614,535 - -

Total shareholders' equity 1,569,456,374 1,492,607,540 1,575,781,045 1,528,687,883

Total liabilities and shareholders' equity 5,608,371,119 4,568,676,007 2,984,181,082 2,683,471,180

- - - -


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Income statementsFor the years ended 31 December 2010 and 2009

(Unit: Baht)



Note 2010 2009 2010 2009

Continuing operations

Revenues

Revenues from construction 2,855,541,942 2,729,952,628 2,699,855,745 2,529,590,415

Sales and service income 1,079,397,793 484,952,206 - -

Other income

Interest income 23,415,664 13,466,344 27,712,682 16,239,522

Management fee income 20,012,374 15,237,122 47,012,374 15,237,122

Reversal of allowance for loss from diminution in value of other long-term investment - 30,468,724 - 30,468,724

Reversal of allowance for loss from diminution in value of investments in joint ventures - - - 11,615,186

Others 51,473,862 70,940,254 18,215,437 21,842,560

Total revenues 4,029,841,635 3,345,017,278 2,792,796,238 2,624,993,529

Expenses

Cost of construction 2,578,500,462 2,493,806,282 2,450,385,946 2,318,090,571

Cost of sales and service 900,618,125 392,920,645 - -

Administrative expenses 281,603,776 245,984,280 161,553,869 156,006,315

Doubtful debts (reversal) 32,920,986 (24,216,980) 99,887,697 (1,709,165)

Remunerations of directors and managements 8 30,550,481 33,967,599 20,932,013 27,313,470

Total expenses 3,824,193,830 3,142,461,826 2,732,759,525 2,499,701,191

Income from continuing operations before share of income from investments in associates, finance cost and corporate income tax 205,647,805 202,555,452 60,036,713 125,292,338

Share of income from investments in associates 13 28,414,027 2,918,738 - -

Income from continuing operations before finance cost and corporate income tax 234,061,832 205,474,190 60,036,713 125,292,338

Finance cost (110,832,465) (59,321,591) (12,943,551) (17,822,653)

Income from continuing operations before corporate income tax 123,229,367 146,152,599 47,093,162 107,469,685

Corporate income tax 24 (6,892,105) (7,734,325) - -

Income for the year from continuing operations 116,337,262 138,418,274 47,093,162 107,469,685

Discontinued operations 25

Loss for the year from discontinued operations (39,661,497) (48,945,508) - -

Net income for the year 76,675,765 89,472,766 47,093,162 107,469,685


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Income statements (continued)For the years ended 31 December 2010 and 2009

(Unit: Baht)



Note 2010 2009 2010 2009

Net income attributable to:

Equity holders of the parent

Income for the year from continuing operations 115,045,060 136,957,296 47,093,162 107,469,685

Loss for the year from discontinued operations (60,770,577) (39,023,508) - -

Income for the year attributable to equity holders of the parent 54,274,483 97,933,788 47,093,162 107,469,685

Minority interests of the subsidiaries - -

Income for the year from continuing operations 1,292,202 1,460,978

Income (loss) for the year from discontinued operations 21,109,080 (9,922,000)

Income (loss) for the year attributable to minority interests of the subsidiaries 22,401,282 (8,461,022)

76,675,765 89,472,766

- -

Basic earnings per share 26

Income for the year from continuing operations

attributable to equity holders of the parent 0.06 0.06 0.02 0.04

Loss for the year from discontinued operations

attributable to equity holders of the parent (0.03) (0.02) - -

Net income attributable to equity holders of the parent 0.03 0.04 0.02 0.04

Weighted average number of ordinary shares (shares) 2,081,313,118 2,484,641,988 2,081,313,118 2,484,641,988


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Statements of changes in shareholders’ equity

For the years ended 31 December 2010 and 2009

(Unit: Baht)


Equity attributable to the parent’s shareholders

Minorityinterest Total

Issued and fullypaid-up share

capitalTranslationadjustment

Statutory reserve Deficit

Total equity attribut-

able to the parent’s

shareholders

Balance as at 31 December 2008 2,484,641,988 95,170,439 50,000,000 (1,258,953,990) 1,370,858,437 22,153,557 1,393,011,994

Income recognised directly in equity:

Increase in translation adjustment - 200,780 - - 200,780 - 200,780

Net income recognised directly in equity - 200,780 - - 200,780 - 200,780

Net income for the year - - - 97,933,788 97,933,788 1,460,978 99,394,766

Total income for the year - 200,780 - 97,933,788 98,134,568 1,460,978 99,595,546


-


Income recognised directly in equity:

Increase in translation adjustment - 173,069 - - 173,069 - 173,069

Net income recognised directly in equity - 173,069 - - 173,069 - 173,069

Net income for the year - - - 54,274,483 54,274,483 22,401,282 76,675,765

Total income for the year - 173,069 - 54,274,483 54,447,552 22,401,282 76,848,834

Decrease in statutory reserve and share capital to offset deficit (Note 22) (931,740,745) - (45,349,342) 977,090,087 - - -

Balance as at 31 December 2010 1,552,901,243 95,544,288 4,650,658 (129,655,632) 1,523,440,557 46,015,817 1,569,456,374


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Statements of changes in shareholders’ equity (continued)For the years ended 31 December 2010 and 2009

(Unit: Baht)

Separate financial statements

Issued and fully

paid-up share capital

Statutory reserve

Retained earnings(deficit) Total

Balance as at 31 December 2008 2,484,641,988 50,000,000 (1,113,423,790) 1,421,218,198

Net income for the year - - 107,469,685 107,469,685


-


Net income for the year - - 47,093,162 47,093,162

Decrease in statutory reserve and

share capital to offset deficit (Note 22) (931,740,745) (47,645,342) 979,386,087 -

Balance as at 31 December 2010 1,552,901,243 2,354,658 20,525,144 1,575,781,045

-


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Cash flow statementsFor the years ended 31 December 2010 and 2009

(Unit: Baht)



2010 2009 2010 2009

Cash flows from operating activities

Income before tax from continuing operations 123,229,367 146,152,599 47,093,162 107,469,685

Loss before tax from discontinued operations (39,661,497) (48,945,508) - -

Net income before tax 83,567,870 97,207,091 47,093,162 107,469,685

Adjustments to reconcile net income before tax to

net cash provided by (paid from) operating activities:

Depreciation and amortisation 376,518,400 196,445,521 147,035,813 149,678,511

Doubtful debts (reversal) 32,920,986 (24,216,980) 99,887,697 (1,709,165)

Reversal of allowance for loss from diminution in value of other long-term investment - (30,468,724) - (30,468,724)

Reversal of allowance for loss from diminution in value of investments in joint ventures - - - (11,615,186)

Share of income from investments in associates (28,414,027) (2,918,738) - -

Gain from disposal of investments in subsidiary - - (359,021) -

Loss from disposal of investments in joint ventures - - 830,519 -

Loss from disposal of other long-term investments 55,091 - 55,091 -

Gain on disposal of equipment (3,625,671) (11,497,496) (1,494,490) (6,766,042)

Unrealised loss (gain) on exchange 26,159,989 (2,227,154) 1,530,031 (1,616,690)

Gain on disposal of property awaiting sale (10,547,862) (2,587,017) (10,547,862) (2,587,017)

Interest income (23,415,664) (13,466,344) (27,712,682) (16,239,522)

Interest expenses 107,633,563 67,970,765 12,943,551 17,822,653

Income from operating activities before changes in

operating assets and liabilities 560,852,675 274,240,924 269,261,809 203,968,503

Decrease (increase) in operating assets

Trade accounts receivable (178,014,385) (101,079,320) (154,146,549) 31,280,513

Unbilled receivables (267,969,508) 41,602,669 (245,886,125) 117,783,650

Retention receivables 51,119,817 (14,176,133) 47,320,045 (40,712,280)

Inventories 43,137,174 129,234,822 68,434,576 136,766,117

Other current assets 112,631,600 (15,868,224) 65,975,840 80,735,767

Increase (decrease) in operating liabilities

Trade accounts payable 409,381,799 155,866,240 204,288,987 (100,782,626)

Advances received from construction (1,945,752) (8,976,026) (1,671,608) 16,617,658

Accrued expenses and other current liabilities 471,329,393 8,789,190 17,524,665 (70,237,306)

Retention payable (4,046,250) (32,634,075) (4,350,460) (27,889,275)

Other non-current liabilities 46,492,536 (2,197,502) 2,752,731 (2,197,502)

Cash flows from operating activities 1,242,969,099 434,802,565 269,503,911 345,333,219

Cash paid for interest expenses (104,352,458) (40,908,274) (12,356,968) (18,412,909)

Cash paid for corporate income tax (52,963,583) (65,176,649) (46,643,210) (61,647,421)

Net cash from operating activities 1,085,653,058 328,717,642 210,503,733 265,272,889


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Cash flow statements (continued)For the years ended 31 December 2010 and 2009

(Unit: Baht)



2010 2009 2010 2009

Cash flows from investing activities

Increase in restricted bank deposits (21,490,841) (37,669,939) (19,203,899) (30,851,878)

Increase in short-term loans and advances to related parties (74,855,401) (25,200,013) (88,227,248) (52,627,432)

Increase in loans to venturer (528,712) - - -

Increase in investments in subsidiaries - - (31,499,790) -

Increase in investments in joint ventures - - - (5,921,974)

Increase in investments in associates (1,000,000) (18,500,000) (1,000,000) (18,500,000)

Increase in other long-term investments (24) (2,499,975) (24) (2,499,975)

Cash received from return of investments in joint ventures (Note 12)

- - 7,591,455 56,417,000

Cash received from disposal of investments in subsidiary (Note 11)

- - 19,500,000 -

Deposit received for share subscription (Note 11) 10,000,000 - 10,000,000 -

Cash received from disposal of other long-term invest-ments

11,235 - 11,235 -

Proceeds from disposal of equipment 7,955,503 29,177,838 5,603,018 10,805,611

Proceeds from disposal of property awaiting sale 51,647,300 10,072,303 51,647,300 10,072,303

Acquisition of equipment (1,100,279,600) (1,427,549,342) (203,719,804) (103,854,932)

Increase in property awaiting sale (43,177,168) (29,770,686) (43,177,168) (29,770,686)

Increase in land awaiting development (7,321,381) (16,000,000) (7,321,381) (16,000,000)

Interest income 5,055,192 1,324,824 4,804,800 691,987

Decrease (increase) in other non-current assets (11,120,573) 3,949,129 455,342 3,808,347

Net cash used in investing activities (1,185,104,470) (1,512,665,861) (294,536,164) (178,231,629)

Cash flows from financing activities

Increase (decrease) in bank overdrafts and

short-term loans from financial institutions (47,929,666) 145,670,104 14,634,837 (9,988,249)

Increase in long-term loan from bank 66,917,946 1,101,403,513 - -

Increase (decrease) in short-term loans and

advances from related parties 9,892,257 (15,917,480) 10,378,095 (16,303,282)

Net cash from (used in) financing activities 28,880,537 1,231,156,137 25,012,932 (26,291,531)

Increase in translation adjustment 173,069 200,780 - -

Net increase (decrease) in cash and cash equivalents (70,397,806) 47,408,698 (59,019,499) 60,749,729

Cash and cash equivalents at beginning of year 205,756,151 158,347,453 118,522,509 57,772,780

Cash and cash equivalents at ending of year 135,358,345 205,756,151 59,503,010 118,522,509

- - - -

Supplemental cash flows information

Non-cash transactions

Transfer of property awaiting sale in settlement of debts - 101,597,953 - 101,597,953

Transfer land awaiting development to land awaiting sale

125,240,537 - 125,240,537 -


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Notes to consolidated financial statementsFor the years ended 31 December 2010 and 2009

1. General information

Nawarat Patanakarn Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand. The Company is principally engaged in the provision of construction services and its registered ad-dress is 2/3, Bangna Towers A, 18th-19th Floor, Moo 14, Bangna-Trad Road Km. 6.5, Bangkaew, Bangplee, Sa-mutprakarn.

2. Basis of preparation

2.1 The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Professions Act B.E. 2547 and their presentation has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 30 January 2009, issued under the Accounting Act B.E. 2543.

The financial statements in Thai language are the official statutory financial statements of the Company. The financial statements in English language have been translated from the Thai language financial state-ments.

The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.

2.2 Basis of consolidation

a) The consolidated financial statements include the financial statements of Nawarat Patanakarn Public Company Limited (“the Company”) and its subsidiaries (“the subsidiaries”) and its jointly controlled entities (“jointly controlled entities”) as follows:

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Company’s nameCountry of

incorporation Paid-up capitalPercentage of shareholding

Assets as a percentage to the consolidated total assets as at

31 December

Revenues as a percentage to the consolidated total

revenues for the years ended 31 December

2010Percent

2009Percent

2010Percent

2009Percent

2010Percent

2009Percent

Subsidiaries:

Meeyahta International Hotel Limited Myanmar 1.75 million Kyats 53 53 0.72 1.53 1.17 1.30

(held by MIHL (Holding) Company Limited)

MIHL (Holding) Company Limited Thailand 19.5 million Baht 100 - - - - -

Myanmar NWR Company Limited Myanmar 0.5 million Kyats 100 100 0.34 0.38 - -

Utilities Business Alliance Company Limited Thailand 40 million Baht 60 60 2.84 2.17 2.71 2.85

NWR (Cambodia) Company Limited Cambodia 505 USD 100 100 0.14 0.29 1.33 1.33

Joint controlled entities (proportionate consolidation):

Nawarat - A.S. Associated Joint Venture Thailand - 70 70 0.06 0.41 - 0.13

Nawarat - Samcon Joint Venture Thailand 29.5 million Baht 51 51 0.06 0.08 - -

Obayashi - Nawarat Joint Venture Thailand 53.7 million Baht 30 30 0.30 0.60 - 0.88

A.S. - Nawarat Joint Venture Thailand 11 million Baht 50 50 0.97 1.43 1.25 3.05

NWR - Strega Joint Venture Thailand - 80 80 0.05 0.28 - 0.13

ITD - Nawarat (L.L.C.) United Arab Emirates 0.3 million UAE dirham 40 40 0.65 0.96 0.55 0.37

NWR - SBCC Joint Venture Thailand - 50 50 39.95 34.26 25.26 12.90

Q I N A Contracting (L.L.C.) United Arab Emirates 3 million UAE dirham - 20 - - - -

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During 2010, the Company terminated its investment in Q I N A Contracting (L.L.C.) as described in Note 12 to the financial statements. In addition, the Company invested in ordinary shares of MIHL (Holding) Company Limited, a subsidiary in Thailand. The Company’s investment represents 100 percent of the registered capital of such company.

b) Subsidiaries are fully consolidated and jointly controlled entities are proportionately consolidated as from the date on which the Company assumes control and continue to be consolidated until the date when such control ceases.

c) The financial statements of the subsidiaries and jointly controlled entities are prepared using the same significant accounting policies as the Company.

d) The assets and liabilities in the financial statements of overseas subsidiary companies and jointly controlled entities are translated to Baht using the exchange rate prevailing on the balance sheet date, and revenues and expenses translated using monthly average exchange rates. The resulting differences are shown under the caption of “Translation adjustment” in shareholders’ equity.

e) Material balances and transactions between the Company, its subsidiary companies and its jointly controlled entities have been eliminated from the consolidated financial statements.

f) Minority interests represent the portion of net income or loss and net assets of the subsidiaries that are not held by the Company and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet.

2.3 The separate financial statements, which present investments in subsidiaries, joint ventures and associ-ates presented under the cost method, have been prepared solely for the benefit of the public.

3. Adoption of new accounting standards

During the current year, the Federation of Accounting Professions issued a number of revised and new account-ing standards as listed below.

a) Accounting standards that are effective for fiscal years beginning on or after 1 January 2011 (ex-cept Framework for the Preparation and Presentation of Financial Statements, which is immedi-ately effective):

Framework for the Preparation and Presentation of Financial Statements (revised 2009)

TAS 1 (revised 2009) Presentation of Financial Statements

TAS 2 (revised 2009) Inventories

TAS 7 (revised 2009) Statement of Cash Flows

TAS 8 (revised 2009) Accounting Policies, Changes in Accounting Estimates and Er-rors

TAS 10 (revised 2009) Events after the Reporting Period

TAS 11 (revised 2009) Construction Contracts

TAS 16 (revised 2009) Property, Plant and Equipment

TAS 17 (revised 2009) Leases

TAS 18 (revised 2009) Revenue

TAS 19 Employee Benefits

TAS 23 (revised 2009) Borrowing Costs

TAS 24 (revised 2009) Related Party Disclosures

TAS 26 Accounting and Reporting by Retirement Benefit Plans

TAS 27 (revised 2009) Consolidated and Separate Financial Statements

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TAS 28 (revised 2009) Investments in Associates

TAS 29 Financial Reporting in Hyperinflationary Economies

TAS 31 (revised 2009) Interests in Joint Ventures

TAS 33 (revised 2009) Earnings per Share

TAS 34 (revised 2009) Interim Financial Reporting

TAS 36 (revised 2009) Impairment of Assets

TAS 37 (revised 2009) Provisions, Contingent Liabilities and Contingent Assets

TAS 38 (revised 2009) Intangible Assets

TAS 40 (revised 2009) Investment Property

TFRS 2 Share-Based Payment

TFRS 3 (revised 2009) Business Combinations

TFRS 5 (revised 2009) Non-current Assets Held for Sale and Discontinued Operations

TFRS 6 Exploration for and Evaluation of Mineral Resources

TFRIC 15 Agreements for the Construction of Real Estate

b) Accounting standards that are effective for fiscal years beginning on or after 1 January 2013:

TAS 12 Income Taxes

TAS 20 (revised 2009) Accounting for Government Grants and Disclosure of Govern-ment Assistance

TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates

The Company’s management believes that these accounting standards will not have any significant im-pact on the financial statements for the year when they are initially applied, except for the following ac-counting standards which management expects the impact on the financial statements in the year when they are adopted.

TAS 19 Employee Benefits

This accounting standard requires employee benefits to be recognised as expense in the period in which the service is performed by the employee. In particular, an entity has to evaluate and make a provision for post-employment benefits using actuarial techniques. Currently, the Company accounts for such employ-ee benefits when they are incurred.

At present, the management is evaluating the impact on the financial statements in the year when this standard is adopted.

TAS 18 (revised 2009) Revenue

This accounting standard requires entities to recognise revenue from sale of goods, which includes real estate developed for sale, when the significant risks and rewards are transferred to the buyer. Currently, the entities can elect to use the percentage-of-completion method in recognising revenue from real estate sales.

The change will have effect the revenue recognition of an associated company, and the Company ac-counts for its investment in this associated company in the consolidated financial statements using the equity method. The effect of the change in such accounting policy to the 2011 consolidated financial state-ment will be to decrease the beginning balance of retained earnings by Baht 58.0 million.

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4. Significant accounting policies

4.1 Revenues and expenses recognition

a) Revenues

Revenues from construction are recognised on a percentage of completion basis, and the percent-age of completion based on the proportion of actual costs incurred to date to the total estimated budget cost. Recognised revenues which are not yet due per the contracts have been presented under the caption of “Unbilled receivables” in the balance sheets.

Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer.

Service income is recognised when services have been rendered taking into account the stage of completion.

Interest income is recognised on an accrual basis based on the effective interest rate.

b) Expenses

Costs of construction, sales and service and other expenses are recognised on an accrual basis.

Provision for anticipated losses on construction projects is made in the accounts in full when the likelihood of loss is ascertained.

4.2 Cash and cash equivalents

Cash and cash equivalents consist of cash in hand and at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions.

4.3 Trade accounts receivable

Trade accounts receivable are stated at the net recognition value. Allowance for doubtful accounts is pro-vided for the estimated losses that may be incurred in collection of receivables. The allowance is gener-ally based on collection experience and analysis of debt aging.

4.4 Inventories

Finished goods and works in process are valued at the lower of cost (first-in, first-out method) and net recognition value. This cost includes all production costs and attributable factory overheads.

Raw materials are valued at the lower of cost (first-in, first-out method) and net recognition value and are charged to production costs whenever consumed.

4.5 Investments

a) Investments in non-marketable equity securities, which the Company classifies as other invest-ments, are valued at cost net of allowance for loss on diminution in value (if any).

b) Investments in associates are accounted for in the consolidated financial statements using the equity method.

c) Investments in subsidiaries, jointly controlled entities and associates are accounted for in the sepa-rate financial statements using the cost method.

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4.6 Property, plant and equipment and depreciation

Land is stated at cost. Plant and equipment are stated at cost less accumulated depreciation and allow-ance for loss on impairment of assets (if any).

Depreciation of plant and equipment is calculated by reference to their costs on a straight-line basis over the following estimated useful lives:

Land improvements - 5 years

Building and constructions - 5,10, 20 years and the period of lease agreement

Hotel and apartment building - 30 years

Tools, machinery and equipment - 2 - 10 years

Office equipment, furniture and fixtures - 2 - 5, 10 years

Hotel equipment and furniture - 10 years

Motor vehicles - 5 years

Depreciation is included in determining income.

No depreciation is provided on land and constructions in progress.

An item of property, plant and equipment is derecognised upon disposal or when no future economic ben-efits are expected from its use or disposal. Any gain or loss arising on disposal of an asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.

4.7 Leasehold right and amortisation

Leasehold right is stated at cost less accumulated amortisation and allowance for loss on impairment of assets (if any). Amortisation is calculated by reference to its cost on the straight-line basis over the lease period.

The amortisation is included in determining income.

4.8 Property awaiting sale

Property awaiting sale is stated at cost less allowance for loss on impairment of assets (if any). Cost com-prises cost of land, design fee, infrastructure and construction.

4.9 Land awaiting development/Land awaiting sale

Land awaiting development and land awaiting sale are stated at cost less allowance for loss on impair-ment of assets (if any). It is consisted of cost of land and development costs.

4.10 Related party transactions

Related parties comprise enterprises and individuals that control, or are controlled by, the Company, its subsidiaries and its jointly controlled entities, whether directly or indirectly, or which are under common control with the Company, its subsidiaries and its jointly controlled entities.

They also include associated companies and individuals which directly or indirectly own a voting interest in the Company, its subsidiaries and its jointly controlled entities that gives them significant influence over the Company, its subsidiaries and its jointly controlled entities, key management personnel, directors and officers with authority in the planning and direction of the operations of the Company, its subsidiaries and its jointly controlled entities.

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4.11 Long-term leases

Leases of property, plant or equipment which transfer substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in other long-term payables, while the interest element is charged to the income statements over the lease period. The property, plant or equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease period.

Operating lease payments are recognised as an expense in the income statement on a straight line basis over the lease term.

4.12 Foreign currencies

Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rate ruling at the balance sheet date.

Gains and losses on exchange are included in determining income.

4.13 Impairment of assets

At each reporting date, the Company, its subsidiaries and its jointly controlled entities perform impairment reviews in respect of the property, plant and equipment and other assets whenever events or changes in circumstances indicate that an asset may be impaired. An impairment loss is recognised when the recov-erable amount of an asset, which is the higher of the asset’s fair value less costs to sell and its value in use, is less than the carrying amount. In determining value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by a valuation model that, based on information available, reflects the amount that the Company, its subsidiaries and its jointly controlled entities could obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal.

An impairment loss is recognised in the income statement.

In the assessment of asset impairment if there is any indication that previously recognised impairment losses may no longer exist or may have decreased, the Company, subsidiaries and jointly controlled enti-ties estimate the asset’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The increased carrying amount of the asset attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined had no im-pairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at a revalued amount, in which case the reversal, which exceeds the carrying amount that would have been determined, is treated as a revaluation increase.

4.14 Employee benefits

Salaries, wages, bonuses and contributions to the social security fund and provident fund are recognised as expenses when incurred.

4.15 Provisions

Provisions are recognised when the Company, its subsidiaries and its jointly controlled entities have a present obligation as a result of a past event, it is probable that an outflow of resources embodying eco-

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nomic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

4.16 Income tax

Income tax is provided in the accounts at the amount expected to be paid to the taxation authorities, based on taxable profits determined in accordance with tax legislation.

4.17 Discontinued operations

The Company discloses profit or loss from discontinued operations in the income statements. This com-prises the total of the post-tax profit or loss of the discontinued operations. The Company has re-present-ed the disclosures for the prior period so that the disclosures relate to all operations that have been dis-continued by the end of the reporting period for the latest period presented.

5. Significant accounting judgments and estimates

The preparation of financial statements in conformity with generally accepted accounting principles at times re-quires management to make subjective judgments and estimates regarding matters that are inherently uncertain. These judgments and estimates affect reported amounts and disclosures and actual results could differ. Signifi-cant judgments and estimates are as follows:

Estimated construction project costs

The Company, its subsidiaries and its jointly controlled entities estimate costs of construction projects based on details of the construction work, taking into account the volume and value of construction materials to be used in the project, labour costs and overhead costs to be incurred to completion of service, including forecast for any changes. Estimates are reviewed regularly or whenever actual costs differ significantly from the figures used in the original estimates.

Allowance for doubtful accounts

In determining an allowance for doubtful accounts, the management needs to make judgment and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition.

Impairment of investments

The Company treats investments in subsidiaries, joint ventures, associates and other long-term investments as impaired when the management judgment that there has been a significant or prolonged decline in the fair value below their cost or where other objective evidence of impairment exists. The determination of what is “significant” or “prolonged” requires judgment.

Property awaiting sale, land awaiting development and land awaiting sale

The Company presents property awaiting sale, land awaiting development and land awaiting sale at cost less an allowance for impairment loss of assets (if any). The management is required to review such assets for impair-ment on a periodical basis and record impairment losses in the period when it is determined that their recoverable amount is lower than the carrying amount. The management used judgment to estimate impairment loss by taking into consideration the fair value.

Depreciation

In determining depreciation of plant and equipment, the management is required to make estimates of the useful lives and salvage values of the plant and equipment of the Company, subsidiaries and jointly controlled entities and to review estimate useful lives and salvage values when there are any changes.

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Litigation

The Company, subsidiaries and jointly controlled entities have contingent liabilities as a result of litigation. The managements of the Company, subsidiaries and jointly controlled entities have used judgment to assess of the results of the litigation and believe that no loss will result.

6. Cash and cash equivalents

(Unit: Thousand Baht)



2010 2009 2010 2009

Cash 60,642 38,402 17,066 27,874

Bank deposits 74,716 167,354 42,437 90,649

Total 135,358 205,756 59,503 118,523

As at 31 December 2010, bank deposits in saving accounts and fixed deposits carried interests between 0.10 and 1.5 percent per annum (2009: between 0.05 and 3.1 percent per annum).

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7. Trade accounts receivable / unbilled receivables

The outstanding balances of trade accounts receivable are aged, based on due date, as follows:




2010 2009 2010 2009

Trade accounts receivable - unrelated parties

Not yet due 347,761 158,434 219,468 72,543

Past due

Less than 3 months 187,997 96,287 169,930 60,115

3 - 6 months 44,822 73,040 35,921 65,159

6 - 12 months 16,506 94,075 16,506 94,074

Longer than 12 months 95,728 56,690 89,405 50,582

Total 692,814 478,526 531,230 342,473

Less: Allowance for doubtful accounts (61,253) (28,944) (61,253) (28,944)

Net 631,561 449,582 469,977 313,529

Trade accounts receivable - unrelated parties, long past due and during legal action

Past due longer than 12 months 944,415 995,295 944,415 995,295


Net - - - -

Total trade accounts receivable - unrelated parties, net 631,561 449,582 469,977 313,529

Trade accounts receivable - related parties

Not yet due 324 5,352 324 5,374

Past due

Less than 3 months 12,751 7,287 13,228 7,793

3 - 6 months 6,656 3,994 6,784 5,032

6 - 12 months 12,320 24,498 13,667 39,172

Longer than 12 months 307,150 345,628 536,954 568,743

Total 339,201 386,759 570,957 626,114


Total trade accounts receivable - related parties, net 80,476 100,694 82,063 123,661

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The outstanding balances of unbilled receivables are as follows:




2010 2009 2010 2009

Project value as per contract 13,157,874 15,094,950 3,187,721 5,124,797

Accumulated amount recognised as revenue on percentage of completion basis

4,689,944 6,043,091 2,047,800 4,394,116

Less: Value of total billed (4,139,944) (5,762,381) (1,588,559) (4,182,082)

550,000 280,710 459,241 212,034


Unbilled receivables - net 536,646 268,676 445,887 200,000

8. Related party transactions

During the years, the Company, its subsidiaries and its jointly controlled entities had significant business transac-tions with related parties, which have been concluded on commercial terms and bases agreed upon in the ordi-nary course of businesses between the Company and those entities. Below is a summary of those transactions.

Business transactions Pricing and lending policy

Revenues from construction, sales and service

Market price

Cost of construction, sales and ser-vice

Market price

Purchase and disposal of equipment Agreed upon basis

Sales of investment in subsidiary company

Mutually agreed price

Interest income Interest at 5 - 19 percent per annum(2009: 5 - 15 percent per annum)

Interest expenses Interest at 6.15 - 6.4 percent per annum(2009: 6.15 - 7 percent per annum)

Management fee income Contract price

Consultation fee Contract price

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(Unit: Million Baht)



2010 2009 2010 2009

Transactions with subsidiaries

(eliminated from the consolidated financial statements)

Cost of construction, sales and service - - 4 4

Interest income - - 1 1

Management fee income - - 27 -

Loans and advances to the parties (Average during the years)

- - 371 369

Sales of investment in subsidiary company - - 20 -

Transactions with related parties

Revenues from construction,sales and service - 13 - 24

Cost of construction, sales and service 2 57 2 31

Interest income 16 11 20 14

Transferred in of property awaiting sale - 79 - 79

Purchase of equipment - 127 - 20

Disposal of equipment 1 - 1 1

Management fee income 20 14 20 14

Consultation fee 21 13 - -

Loans and advances to the parties (Average during the years)

224 171 293 221

Loans and advances from the parties (Average during the years)

1 3 2 6

Transactions with director

Salaries and meeting allowances 31 34 21 27

Guarantee obligations with related parties

The Company has outstanding guarantee obligations with its related parties, as described in Note 29.3 to the fi-nancial statements.

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The outstanding balances of the related party transactions had been shown in the balance sheets under the fol-lowing captions:


Relationship

Consolidatedfinancial statements


2010 2009 2010 2009

Trade accounts receivable - related parties

Meeyahta International Hotel Limited (1) - - 202,412 202,412

Nawarat - A.S. Associated Joint Venture (2) 5,123 5,123 17,078 17,078

A.S. - Nawarat Joint Venture (2) 6,825 5,665 13,651 11,329

ITD - Nawarat (L.L.C.) (2) 7,071 6,586 11,785 10,976

Nawarat - Strega Joint Venture (2) 1,350 3,688 6,749 18,439

Italian - Thai Development Plc. (3) 52,582 75,182 52,582 75,182

Instyle Estate Park Co., Ltd. (3) 45,306 29,706 45,306 29,706

New Dacade Co., Ltd. (3) 107,341 144,165 107,341 144,165

Ruen Rapee Co., Ltd. (3) 86,163 81,823 86,163 81,823

East Bangkok Assets Co., Ltd. (3) 24,797 27,537 24,797 27,537

Others 2,643 7,284 3,093 7,467

Total 339,201 386,759 570,957 626,114


Total trade accounts receivable - related parties 80,476 100,694 82,063 123,661

Unbilled receivables - related parties


A.S. - Nawarat Joint Venture (2) - 3,883 - 7,766

East Bangkok Assets Co., Ltd. (3) 1,617 279 1,617 279

Total unbilled receivables - related parties 5,898 8,443 15,889 22,317

Retention receivables - related parties

Ruen Rapee Co., Ltd. (3) - 5,063 - 5,063

East Bangkok Assets Co., Ltd. (3) - 1,341 - 1,341

Total retention receivables - related parties - 6,404 - 6,404

Accrued income from related parties

ITD - Nawarat (L.L.C.) (2) 109 120 181 200

New Dacade Co., Ltd. (3) 43 90 43 90

VSPN Property Co., Ltd. (4) 153 - 153 -

Others 14 116 24 124

Total accrued income from related parties 319 326 401 414

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Relationship



2010 2009 2010 2009

Short-term loans and advances to related parties

Meeyahta International Hotel Limited (1) - - 1,098,461 1,059,598

Myanmar NWR Company Limited (1) - - 16,797 14,822

ITD - Nawarat (L.L.C.) (2) 134,485 102,788 224,141 171,314

Instyle Estate Park Co., Ltd. (3) 91,775 65,877 91,775 65,877

Concorde Yachts International Co., Ltd. (3) 104,410 104,710 104,410 104,710

C.I.N Estate Co., Ltd. (4) 24,327 - 24,327 -

VSPN Property Co., Ltd. (4) 22,210 - 22,210 -

Others 376 - 313 9

Total 377,583 273,375 1,582,434 1,416,330

Less: Allowance for doubtful accounts (134,422) (108,524) (1,473,823) (1,354,260)

Total short-term loans and advances to related parties - net 243,161 164,851 108,611 62,070

Advance payment to subcontractor - related party

New Dacade Co., Ltd. (3) 24,088 25,637 24,088 25,637

Total advance payment to subcontractor - related party 24,088 25,637 24,088 25,637

Trade accounts payable - related parties

Utility Business Alliance Co., Ltd. (1) - - 1,412 1,628


Italian - Thai Development Plc. (3) 344,173 116,008 12,097 13,530

New Dacade Co., Ltd. (3) 1,594 398 1,594 398

Others 155 128 288 261

Total trade accounts payable - related parties 352,239 122,851 36,448 36,874

Short-term loans and advances from related parties

A.S. - Nawarat Joint Venture (2) 5,312 123 10,624 246

Italian - Thai Development Plc. (3) 113,595 108,891 - -

Serge Pun & Associates Ltd. (3) 78,476 83,999 - -

Serge Pun & Associates (Myanmar) Ltd. (3) 134,318 143,664 - -

Premier International Co., Ltd. (3) 42,706 45,731 - -

Premier Enterprise Plc. (3) 45,374 48,589 - -

Others 2 3 - -

Total 419,783 431,000 10,624 246

Less: Minority interest in net loss of subsidiary (300,874) (321,983) - -

Total short-term loans and advances from related parties 118,909 109,017 10,624 246

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Relationship



2010 2009 2010 2009

Advance received from construction - related parties

Italian - Thai Development Plc. (3) 600 828 600 828

Ruen Rapee Co., Ltd. (3) 89 89 89 89

Total advance received from construction - related parties

689 917 689 917

Retention payable - related parties

Utility Business Alliance Co., Ltd. (1) - - 620 -

New Dacade Co., Ltd. (3) - 4,508 - 4,508

Total retention payable - related parties - 4,508 620 4,508

(1) Subsidiary company (2) Jointly controlled entity and participant (3) Related company by way of common shareholders and/or authorised directors being members of the same family as that of the Company’s directors (4) Associated company

9. Loans to venturer

As at 31 December 2010, a jointly controlled entity had loans to a venturer amounting to Baht 11.1 million (in proportion to the Company’s interest), carrying interest at the rate of MOR per annum which were repayable at call.

10. Inventories(Unit: Thousand Baht)


CostAllowance for diminution in

value of inventories Inventories - net

2010 2009 2010 2009 2010 2009

Finished goods 43,064 46,593 (11,022) (14,687) 32,042 31,906

Works in process 50,960 111,339 - - 50,960 111,339

Raw materials and supplies 330,293 312,152 (2,060) (1,025) 328,233 311,127

Total 424,317 470,084 (13,082) (15,712) 411,235 454,372



CostAllowance for diminution in

value of inventories Inventories - net

2010 2009 2010 2009 2010 2009

Finished goods 43,064 46,593 (11,022) (14,687) 32,042 31,906

Works in process 50,960 106,174 - - 50,960 106,174

Raw materials and supplies 295,448 307,769 (2,060) (1,025) 293,388 306,744

Total 389,472 460,536 (13,082) (15,712) 376,390 444,824

Nawarat Patanakarn

79

Annual Report 2010

11. Investments in subsidiaries

Details of investments in subsidiaries as presented in separate financial statements are as follows:


Cost

Company’s name 2010 2009

Myanmar NWR Company Limited 3,013 3,013

Meeyahta International Hotel Limited - 19,141

MIHL (Holding) Company Limited 19,499 -

Utility Business Alliance Company Limited 28,267 16,267

NWR (Cambodia) Company Limited 17 17

Total 50,796 38,438

Less: Allowance for loss from diminution in values of invest-ments

(19,499) (19,141)

Investments in subsidiaries - net 31,297 19,297

On 3 November 2010, Utility Business Alliance Company Limited called up an additional 50 percent of the value of the 2.4 million ordinary shares held by the Company which were not fully paid (par value of Baht 10 each), or a total of Baht 12.0 million. The Company has made payment of such amount.

On 12 November 2010, Meeting No. 11/2553 of the Company’s Board of Directors passed to following resolu-tions:

a) Approved the Company’s to invest in MIHL (Holding) Company Limited, a company newly established in Thailand with the objective of investment in companies and public companies. The Company has a 100 percent shareholding in such company and has paid in the full amount of its registered capital of Baht 19.5 million, or representing 100 percent of its registered share capital.

b) Approved the Company’s sale of all of its investment in Meeyahta International Hotel Limited to MIHL (Holding) Company Limited, a wholly owned subsidiary of the Company. The Company sold the invest-ment for Baht 19.5 million and has already received payment.

c) Approved the Company’s sale of all investment in MIHL (Holding) Company Limited to an outside party. The Company has entered into an agreement to sell the investment to this party at a mutually agreed price of Baht 20.0 million. The Company received a deposit for the shares from the buyer on the date the agree-ment executed. In addition, the Company and the buyer agreed that there would be no restrictions on the disposal of this investment, even though MIHL (Holding) Company Limited has investment in Meeyahta International Hotel Limited which is involved in the dispute discussed in note 15 to the financial state-ments. However, payment for the investment has not yet been made and the Company has not yet trans-ferred the subsidiary’s share to the buyer. The Company therefore continues to treat the investment as investment in a subsidiary.

Nawarat Patanakarn

80

Annual Report 2010

12. Investments in joint ventures

12.1 Details of investments in joint ventures:

Investments in joint ventures as presented in the separate financial statements represent investments in entities which are jointly controlled by the Company and other companies.

Details of these investments are as follows:


Cost

Jointly controlled entities 2010 2009

Nawarat - Samcon Joint Venture 15,045 15,045

Obayashi - Nawarat Joint Venture 16,098 16,098

A.S. - Nawarat Joint Venture 5,500 8,000

ITD - Nawarat (L.L.C.) 592 592

Q I N A Contracting (L.L.C.) - 5,922

Total 37,235 45,657

Less: Allowance for loss from diminution in values of investments (12,245) (12,245)

Investments in joint ventures - net 24,990 33,412

In 2010, A.S. - Nawarat Joint Venture announced the return of capital to its controllers and the Company received the return of Baht 2.5 million of capital, on proportions to its control. In addition, the Company terminated its investment in Q I N A Contracting (L.L.C.) and received the return of capital amounting to Baht 5.1 million.

Nawarat Patanakarn

81

Annual Report 2010

12.2 Summarised financial information of jointly controlled entities

The Company’s proportionate shares of the assets, liabilities, revenue and expenses of significant jointly controlled entities, according to proportion under joint venture agreement, is as follows:


Jointly controlled entitiesPaid-up capital as at

31 DecemberTotal assets as at

31 DecemberTotal liabilities as at

31 DecemberTotal revenues

for the yearNet income (loss) for

the year

2010 2009 2010 2009 2010 2009 2010 2009 2010 2009

Nawarat - A.S. Associated Joint Venture - - 3 3 - - - 4 - 3

Nawarat - Samcon Joint Venture 15 15 3 4 - - - - - -

Obayashi - Nawarat Joint Venture 16 16 17 28 1 2 - 30 (10) 8

A.S. - Nawarat Joint Venture 6 8 54 65 41 59 51 105 8 (4)

Nawarat - Strega Joint Venture - - 3 13 - 1 - 4 - -

ITD - Nawarat (L.L.C.) 1 1 36 44 147 137 23 13 (33) (16)

Q I N A Contracting (L.L.C.) - 6 - - - - - - - -

NWR - SBCC Joint Venture - - 2,241 1,565 2,225 1,561 1,030 443 12 4

Nawarat Patanakarn

82

Annual Report 2010

13. Investments in associated companies

13.1 Details of associates:


Separate financial statements Consolidated financial statements

Company’s name Nature of business

Country of incorpora-

tionShareholding percentage

(percent)Carrying amounts based

on cost methodCarrying amounts based

on equity methodShare of income (loss)

from investments

2010 2009 2010 2009 2010 2009 2010 2009

C.I.N Estate Co., Ltd. Property development Thailand 40 40 100,000 100,000 99,767 70,857 28,909 5,469

VSPN Property Co., Ltd. Property development Thailand 25 25 25,000 24,000 15,501 14,997 (495) (2,550)

Total 125,000 124,000 115,268 85,854 28,414 2,919

During 2010, VSPN Property Company Limited called up proceed of an additional 249,998 shares, or 4 percent of the Company’s investment, totaling Baht 1 million. As a result, the share capital of that company was fully paid.

13.2 Summarised financial information of associates

Financial information of the associated companies is summarised bellows:


Company’s namePaid-up capital

as at 31 DecemberTotal assets

as at 31 DecemberTotal liabilities

as at 31 DecemberTotal revenues

for the yearNet income (loss)

for the year

2010 2009 2010 2009 2010 2009 2010 2009 2010 2009

C.I.N Estate Co., Ltd. 250 250 1,195 674 945 497 357 128 72 14

VSPN Property Co., Ltd. 100 96 201 220 132 153 80 31 (2) (10)

Nawarat Patanakarn

83

Annual Report 2010

14. Other long-term investments(Unit: Thousand Baht)

Consolidated/Separate financial statements

Percentage ofshareholding

(percent)

Cost

2010 2009

SG Star Properties Ltd. 4.71 35,762 35,762

Mission Success 2005 Company Limited 5.56 10,000 10,000

Thai Contractors Asset Company Limited 2.00 10,000 10,000

Others - 3,040 3,109

Total 58,802 58,871

Less: Allowance for loss on impairment of investments (38,641) (38,644)

Other long-term investments - net 20,161 20,227

Nawarat Patanakarn

84

Annual Report 2010

15. Hotel, apartment building and equipment(Unit: Thousand Baht)

Hotel and apartmentbuilding

Machinery andequipment

Equipment andfurniture

Furniture andfixtures

Motorvehicles

Constructionsin progress Total

Cost:

31 December 2009 502,166 30,562 54,157 21,838 20,429 4,446 633,598

Additions - - 760 910 - - 1,670

Translation adjustment (67,548) (2,951) (5,229) (2,109) (1,973) (429) (80,239)

31 December 2010 434,618 27,611 49,688 20,639 18,456 4,017 555,029

Accumulated depreciation:

31 December 2009 156,341 30,561 41,853 21,836 20,324 - 270,915

Depreciation for the year 14,543 - 5,293 33 102 - 19,971

Translation adjustment (22,835) (2,951) (4,360) (2,110) (1,970) - (34,226)

31 December 2010 148,049 27,610 42,786 19,759 18,456 - 256,660

Allowance for impairment loss:

31 December 2009 306,510 - - - - - 306,510

Translation adjustment (19,941) - - - - - (19,941)

31 December 2010 286,569 - - - - - 286,569

Net book value:

31 December 2009 39,315 1 12,304 2 105 4,446 56,173

31 December 2010 - 1 6,902 880 - 4,017 11,800

Depreciation (included in administrativeexpenses):

2009 24,572

2010 19,971

Nawarat Patanakarn

85

Annual Report 2010

This represents the hotel and apartment building and equipment of Meeyahta International Hotel Limited in which the Company’s subsidiary holds a 53 percent of registered capital, under a 30-year lease agreement with Myan-mar Railways (commencing in 1999). The agreement is renewable for a period of 10 years. However, the subsid-iary has suffered operating losses and has a significant capital deficit.

A condition of the investment in the project was that the subsidiary was to transfer its rights over the property to the lessor at the end of the lease agreement, and to pay an annual lease rental for the premises of USD 910,152, with the rate subject to revision every 5 years, plus USD 35,000 and 2 percent per annum of the gross receipts or turnover of this project. As at 31 December 2010, the subsidiary had future rental commitment under this lease amounting to approximately USD 19 million.

In 2003, the Company arranged for an independent appraiser to revalue this project using the Income Approach, in order to assess the fair value of the project. According to this revaluation, the project’s fair value approximates its carrying value.

In 2009, because the Company was unable to arrange to have the project revalued by an independent appraiser, it hired a senior engineer of the General Attorney Officer of the Union of Myanmar to reappraise the valuation of the hotel building using the Replacement Cost Approach. The management used this valuation report as a basis for their decision that the allowance for impairment loss set aside was adequate.

Dispute

In 2007, Meeyahta International Hotel Limited received a letter from the Government of the Union of Myanmar canceling the lease agreement because such company had breached the contract to renovate the hotel buildings and had outstanding land rental of approximately USD 10.0 million, accrued from 1998 to 2008.

To protect the rights of creditors and postpone the cancellation of the agreement, the Company is suing Meeyah-ta International Hotel Limited for repayment of project construction expenses. The case is now concluded, with the Court of First Instance of the Union of Myanmar ordering that the Company received payment of all project construction expenses. If Meeyahta International Hotel Limited is unable to make payment in accordance with the Court order, the Court ordered that the hotel building of that company be sold by auction in order to settle its in-debtedness of the Company.

Additionally, in 2007, a minority shareholder of Meeyahta International Hotel Limited notified the Company that it had breached a shareholders’ agreement and sued the Company to transfer shares of such company to this minority shareholder. The case is currently being heard by the Court of First Instance of the Union of Myanmar.

Nawarat Patanakarn

86

Annual Report 2010

16. Property, plant and equipment


Consolidated LandLand

improvement

Building,construction

andimprovement

Tool,machinery

andequipment

Officeequipment,

furniture andfixtures

Motorvehicles

Constructionsin

progress Total

Cost:

31 December 2009 149,173 25,518 56,145 2,830,079 134,421 549,487 397,545 4,142,368

Additions - 814 399 831,664 10,760 30,417 224,556 1,098,610

Disposals - - - (20,062) (1,369) (14,037) - (35,468)

Transferred in (out) - 45 23,332 430,396 635 11,767 (466,175) -

Translation adjustment - - - (122) (7) (4) - (133)

31 December 2010 149,173 26,377 79,876 4,071,955 144,440 577,630 155,926 5,205,377


31 December 2009 - 24,136 44,855 1,663,444 117,740 506,819 - 2,356,994

Depreciation for the year - 386 3,757 316,550 8,351 24,916 - 353,960

Depreciation on disposals - - - (17,566) (1,184) (12,388) - (31,138)

31 December 2010 - 24,522 48,612 1,962,428 124,907 519,347 - 2,679,816


31 December 2009 - - - 1,306 - - - 1,306

31 December 2010 - - - 1,306 - - - 1,306

Net book value:

31 December 2009 149,173 1,382 11,290 1,165,329 16,681 42,668 397,545 1,784,068

31 December 2010 149,173 1,855 31,264 2,108,221 19,533 58,283 155,926 2,524,255

Depreciation (included in income statements):

2009 (Baht 161 included in manufacturing cost, and the balance in administrative expenses) 169,287


Nawarat Patanakarn

87

Annual Report 2010


Separate financial statements LandLand

improvement

Building,construction

andimprovement

Tool,machinery

andequipment

Officeequipment,

furniture andfixtures

Motorvehicles

Constructionsin

progress Total

Cost:

31 December 2009 149,173 25,518 56,138 1,959,662 123,114 535,249 538 2,849,392

Additions - 814 294 108,005 7,759 26,280 60,568 203,720

Disposals - - - (15,454) (705) (14,037) - (30,196)

Transferred in (out) - 45 2,458 39,078 - 11,767 (53,348) -

31 December 2010 149,173 26,377 58,890 2,091,291 130,168 559,259 7,758 3,022,916


31 December 2009 - 24,136 44,857 1,681,900 111,413 505,232 - 2,367,538

Depreciation for the year - 386 1,919 113,942 6,398 21,804 - 144,449

Depreciation on disposals - - - (13,111) (588) (12,388) - (26,087)

31 December 2010 - 24,522 46,776 1,782,731 117,223 514,648 - 2,485,900


31 December 2009 - - - 1,306 - - - 1,306

31 December 2010 - - - 1,306 - - - 1,306

Net book value:

31 December 2009 149,173 1,382 11,281 276,456 11,701 30,017 538 480,548

31 December 2010 149,173 1,855 12,114 307,254 12,945 44,611 7,758 535,710

Depreciation (included in income statements):



As at 31 December 2010, certain plant and equipment items have been fully depreciated but are still in use. The gross carrying amount (before deducting accumulated depreciation and allowance for impairment loss) of those assets amounted to approximately Baht 2,186 million (2009: Baht 1,900 million) (The Company only: Baht 2,170 million, 2009: Baht 1,895 million).

Nawarat Patanakarn

88

Annual Report 2010

17. Leasehold right for land


Consolidated/Separate financial statements

2010 2009

Leasehold right 69,418 69,418

Less: Accumulated amortisation (43,979) (41,392)

Leasehold right - net 25,439 28,026

Amortisation included in the income statements for the year 2,587 2,587

18. Property awaiting sale

This represents property received in settlement for of accounts receivable. The Company recorded cost of these assets based on the values assigned by independent appraisers.

Movements of the property awaiting sale account for the year ended 31 December 2010 are summarised below.


Consolidated/ Separate financial statements

Balance as at 31 December 2009 205,745

Increase in property development during the year 43,177

Disposal during the year (41,100)

Balance as at 31 December 2010 207,822

The Company arranged for an independent appraiser to revalue assets of the project by using the Market Com-parison Approach and the Depreciated Replacement Cost Approach. According to this revaluation, the appraised values of the project are higher than its carrying amount.

19. Land awaiting development/Land awaiting sale

As at 31 December 2010 and 2009, land awaiting development comprises of:


Consolidated/Separatefinancial statements

2010 2009

Land costs 18,613 136,532

Development costs 3,298 3,298

Total 21,911 139,830

In 2009 and 2010, the Company arranged for independent appraisers to revalue one plot of land, using the Mar-ket Comparison Approach. According to these revaluations, the appraised value of the land was higher than its carrying amount. In addition, the Company appraised the value of the remaining land by comparison with the price appraised by the Land Department which is higher than the carrying amount.

However, the Company decided to dispose of two plot of land awaiting for development since the Company has no plans to develop the land. Consequently, the Company transferred such land awaiting development to land awaiting sale.

Nawarat Patanakarn

89

Annual Report 2010

Movements of the land awaiting development account for the year ended 31 December 2010 are summarised below.

(Unit: Thousand Baht)Consolidated/Separate

financial statementsBalance as at 31 December 2009 139,830Increase in cost of land development during the year 7,321Transferred to land awaiting sale (125,240)Balance as at 31 December 2010 21,911

20. Bank overdrafts and short-term loans from financial institutions


Interest rate(% p.a.)


Separatefinancial statements

2010 2009 2010 2009

Bank overdrafts MOR+0.25 7,241 3,144 5,863 220

Trust receipt payable 6.00, MLR 32,422 154,013 32,422 -

Short-term loans 5.85-7.50, MLR, MOR 320,480 250,916 222,486 245,916

Total 360,143 408,073 260,771 246,136

Credit facilities provided to the Company, its subsidiaries and its jointly controlled entities by financial institutions were secured by the following mortgages and pledges of assets and guarantees:

1. Pledge of deposits at financial institutions amounting to Baht 113 million. (The Company only: Baht 93 million).

2. The mortgage of part of land and the construction thereon, ships and property awaiting sale with net book values as of 31 December 2010 totaling Baht 300 million.

3. Transfer of rights of claim over collections for work done under construction agreements for some of the projects.

The credit facility agreements stipulate covenants including restrictions on the use of working capital and condi-tions as to the order in which principal and interest are to be repaid.

21. Long-term loan from bank

In 2009, NWR - SBCC Joint Venture (over which the Company holds 50 percent of control) entered into a credit facility agreement with a bank, to obtain a long-term loan facility of Baht 2,700 million to be used to purchase and repair machinery and equipment for the joint venture’s project. Such loan carries interest at minimum loan rate (MLR) per annum and repayable as follow.

Repayment schedule Principal repayment per month

May 2010 - April 2011 At least Baht 30 million per month or 25 percent of theamount that the Joint venture received from contractor.



Nawarat Patanakarn

90

Annual Report 2010

On 30 December 2010, the long-term loan agreement was amended as described below.

1. Change in interest rate from the MLR per annum to MLR - 1 per annum

2. Change in repayment term and schedule to be the following:

Repayment schedule Principal repayment per month

May 2010 - December 2010 At least Baht 30 million per month or 25 percent of theamount that the Joint venture received from contractor

January 2011 - February 2017 At 18.5 percent of the amount that the Joint venture received from contractor

In addition, the loan is repayable within June 2017.

3. Change in some covenants relating to, such as, a repayment payable of machinery, dividend pay-ment, maintaining certain debt to equity and debt service coverage ratios

The loan agreement contains covenants as stipulated in the agreement and restrictions imposed by the lender, relating to such matters as asset restriction, dividend payment, reduction of capital, the maintenance of a certain debt to equity ratio and debt service coverage ratio.

As at 31 December 2010, the undrawn amount of loan under the above agreement amounted to Baht 79 million.

Movements in the long-term loan from bank account during the year ended 31 December 2010 are summarised below.



Balance as at 1 January 2010 1,101,403

Add: Increase during the year 209,168

Less: Payment during the year (142,250)

Balance as at 31 December 2010 1,168,321

Less: Current portion (177,972)

Long-term loan from bank, net of current portion 990,349

22. Share capital/Statutory reserve

On 29 April 2010, the 2010 Annual General Meeting of the Company’s shareholders approved the following sig-nificant resolutions:

22.1 Transfer Baht 50 million from the statutory reserve to offset the Company’s deficit.

22.2 Reduce the Company’s registered capital from Baht 3,150 million (3,149,691,424 ordinary shares with a par value of Baht 1 each) to Baht 2,218 million (2,217,950,679 ordinary shares with a par value of Baht 1 each) and its issued and fully paid capital from Baht 2,485 million (2,484,641,988 ordinary shares with a par value of Baht 1 each) to Baht 1,553 million (1,552,901,243 ordinary shares with a par value of Baht 1 each), by decreasing issued and fully paid capital by 931,740,745 shares. The capital reduction was made by proportionately reducing each shareholder’s existing holding and was deducted against the Company’s deficit. On 30 July 2010, the Company registered such reduction of shares with the Ministry of Commerce.

Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution.

Nawarat Patanakarn

91

Annual Report 2010

23. Expenses by nature

Significant expenses by nature are as follows:




2010 2009 2010 2009

Raw materials and consumables used 1,258,432 1,214,820 1,221,532 1,185,056

Salary and wages and other employee benefits 446,374 451,605 377,881 383,468

Subcontractor costs 566,469 631,779 298,023 296,325

Fuel charges 385,974 159,411 103,898 81,067

Depreciation and amortisation 356,547 171,874 147,036 149,678

Repair and maintenance 184,493 219,428 71,808 124,024

Other expenses 561,997 311,460 453,838 292,833

Changes in inventories of finished goods and work in process 63,908 (17,915) 58,743 (12,750)

Total 3,824,194 3,142,462 2,732,759 2,499,701

24. Corporate income tax

The Company is not liable to corporate income tax for the years due to tax loss brought forward.

Corporate income tax of the subsidiaries and jointly controlled entities for the year are calculated on net income before income tax after adding back expenses and deducting income which are disallowable for tax computation purposes.

25. Discontinued operations

On 12 November 2010, a Meeting of the Company’s Board of Directors No. 11/2553 resolved to sell the invest-ment in Meeyahta International Hotel Limited, the Company’s subsidiary which operates a hotel business in the Union of Myanmar. Details of the sale of such investment are as follow.

1. The Company will sell its investment in Meeyahta International Hotel Limited to MIHL (Holding) Company Limited, the Company’s subsidiary.

2. The Company will sell its investment in MIHL (Holding) Company Limited to an outside party.

The Company’s management expects that the sale of the investment in Meeyahta International Hotel Limited will be completed within the first quarter of 2011. Therefore, as at 31 December 2010, the Company presented the results of this subsidiary’s operations as a discontinued operation.

However, the consolidated financial statements included assets and liabilities of Meeyahta International Hotel Limited of which the majority are short-term. In addition, the recoverable value of the hotel, apartment building and equipment of this company is determined using the fair value method, based on the revaluation of the inde-pendent appraiser discussed in Note 15 to the financial statements. The Company therefore determined the fair value of the assets and liabilities approximated their carrying value.

Nawarat Patanakarn

92

Annual Report 2010

The operating results for the years ended 31 December 2010 and 2009 of Meeyahta International Hotel Limited, which are classified as discontinued operations, is presented below.


2010 2009

Discontinued operations

Revenues

Service income 47,704 44,763

Total revenues 47,704 44,763

Expenses

Cost of service 29,371 27,740

Administrative expenses 49,502 57,319

Total expenses 78,873 85,059

Loss from discontinued operations before finance cost (31,169) (40,296)

Finance cost (8,492) (8,649)

Net loss for the year from discontinued operations (39,661) (48,945)

The results of cash flows for the years ended 31 December 2010 and 2009 of Meeyahta International Hotel Lim-ited which classified as discontinued operations is presented below.


2010 2009

The net cash flows incurred for the years:

Operating activities (1,714) 10,371

Investing activities (1,670) (1,155)

Cash inflows (3,384) 9,216

Increase (decrease) in translation adjustment 17,842 (19,917)

Net cash inflows 14,458 (10,701)

26. Basic earnings per share

Basic earnings per share is calculated by dividing the net income for the year by the weighted average number of ordinary shares in issue during the year.

Nawarat Patanakarn

93

Annual Report 2010

27. Segment information

The Company, its subsidiaries and its jointly controlled entities’ business operations involve in (1) the construction segment (2) a jointly controlled entity which is incorporated in Thailand under the joint venture agreement, en-gaged in the work of soil and coal extraction and transportation segment (3) a subsidiary which is incorporated in Cambodia, engaged in the provision of construction consulting services. Below is the consolidated financial infor-mation of the Company, its subsidiaries and its jointly controlled entities by segment.


Construction

Soil and coal extraction and transportation

Constructions consulting services Total

2010 2009 2010 2009 2010 2009 2010 2009

Revenues from construction, sales and service 2,856 2,730 1,025 441 54 44 3,935 3,215

Operating income (loss) 17 (2) 102 39 25 11 144 48

Other income and expenses 90 157

Finance cost (111) (59)

Corporate income tax (7) (8)

Minority interest of the subsidiaries (1) (1)

Net income attributable to equity holders of the parent 115 137

Property, plant and equipment andleasehold right 567 517 1,983 1,295 - - 2,550 1,812

Total assets 3,319 2,921 2,241 1,565 8 13 5,568 4,499

Transfer prices between business segments are as set out in Note 8 to the financial statements.

28. Provident fund

The Company, its subsidiary and its jointly controlled entity and their employees have jointly established a provi-dent fund in accordance with the Provident Fund Act B.E. 2530. The fund is contributed by both employees and the Company, its subsidiary and its jointly controlled entity and will be paid to their employees upon termination in accordance with the rules of the provident fund of the Company, its subsidiary and its jointly controlled entity. The fund is managed by Bank of Ayudhaya Public Company Limited and ING Funds (Thailand) Company Limited. During the year 2010, the Company, its subsidiary and its jointly controlled entity contributed Baht 9.5 million to the fund (2009: Baht 9.2 million) (The Company only: Baht 8.6 million, 2009: Baht 8.8 million).

29. Commitments and contingent liabilities

29.1 Capital commitments

As at 31 December 2010, the Company and its jointly controlled entity had the following commitments:

a) The Company had an outstanding commitment of approximately Baht 48.0 million in respect of the purchase of land.

b) The Company had an outstanding commitment of approximately USD 4,495 in respect of the un-called portion of investment in a subsidiary company.

c) A jointly controlled entity had capital commitments (in proportion to the Company’s interest) of ap-proximately Baht 22.9 million, relating to the acquisition of machinery and construction of buildings.

Nawarat Patanakarn

94

Annual Report 2010

29.2 Operating lease commitments

The Company and its jointly controlled entity (in proportion to the company’s interests) entered into sev-eral lease agreements in respect of lease of land and equipment. The terms of the agreements generally range from 1 to 30 years. As at 31 December 2010, future minimum lease payments required under these non-cancellable operating leases contracts were as follows.


Payable withinConsolidated

financial statementsSeparate

financial statements

Within 1 year 12.1 10.8

Between 1 year to 5 years 18.4 16.6

More than 5 years 15.6 14.6

29.3 Guarantees

The outstanding bank guarantees issued by banks on behalf of the Company, its subsidiaries and its jointly controlled entities (in proportion to the Company’s interest) in respect of certain performance bonds as required in the normal course of business, as at 31 December 2010 were summarised as follows.



Separatefinancial statements

Denominated in Baht 2,024.0 1,166.8

Denominated in UAE dirham 3.9 -

Denominated in Yen 12.2 12.2

Denominated in USD 1.9 1.9

29.4 Service commitments

Its jointly controlled entity had commitments in respect of service as follows:

Agreement Contractual period

Commitments (in proportion to the

Company’s interest)

1. Soil and coal extraction and transportation agreement

1 March 2010 - 28 February 2011

Baht 27.0 million

2. Machinery repair and maintenance service agreement

1 November 2010 - 15 February 2011

Baht 1.6 million

3. Project consultation agreement(1) 1 March 2009 - 31 July 2010

Baht 15.0 million per year

1 August 2010 - 31 December 2014


1 January 2015 - 28 February 2018


(1) The agreement may be terminated with immediate effect by a written notice if the soil and coal extraction and transportation agreement between the Electricity Generating Authority of Thailand and the jointly controlled entity is terminated.

Nawarat Patanakarn

95

Annual Report 2010

30. Financial instruments

30.1 Financial risk management

The Group’s (the Company, its subsidiaries and its jointly controlled entities) financial instruments, as de-fined under Thai Accounting Standard No. 107 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, trade accounts receivable, loans, investments, short-term loans and long-term loan. The financial risks associated with these financial instruments and how they are managed is described below.

Credit risk

The Group is exposed to credit risk primarily with respect to construction contract debtors. However, since the majority of construction services are made to creditworthy customers such as state enterprises and government agencies and due to the large number of entities comprising the Group’s customer base, the Group does not anticipate material losses from its debt collection. The maximum exposure to credit risk is limited to the carrying amount of receivables, loans and other receivables as stated in the balance sheets.

Interest rate risk

The Group’s exposure to interest rate risk relates primarily to its cash at banks, bank overdrafts and short-term and long-term borrowings. However, since most of the Group’s financial assets and liabilities bear floating interest rates which are close to the market rate or fixed interest rates which will reach maturity in the near future, the interest rate risk is expected to be minimal.

Foreign currency risk

The Group’s exposure to foreign currency risk arises mainly from loans to related parties, trading transac-tions and income derived from overseas that are denominated in foreign currencies.

The balances of financial assets and liabilities denominated in foreign currencies which were not covered by forward exchange contracts as at 31 December 2010 are summarised below.

Foreign currency

Financialassets

(Million)

Financial liabilities(Million)

Exchange rateas at 31 December 2010

Buying rate(Baht per 1

foreign currency unit)

Selling rate(Baht per 1

foreign currency unit)

Consolidated financialstatements

USD 35.2 1.0 29.9082 30.2963

Kip 9,012.9 7,483.9 0.0037 0.0038

JPY 17.5 - 0.3657 0.3742


USD 35.1 1.0 29.9082 30.2963

Kip 9,012.9 7,483.9 0.0037 0.0038

In addition, the Company is also exposed to the effect of foreign exchange movements on its investments in foreign subsidiary companies, which currently are not hedged by any derivative financial instrument.

Nawarat Patanakarn

96

Annual Report 2010

30.2 Fair value of financial instruments

Since the majority of the Group’s financial instruments are short-term in nature or bear floating interest rates for long-term loan, their fair value is not expected to be materially different from the amounts pre-sented in the balance sheets.

A fair value is the amount for which an asset can be exchanged or a liability settled between knowledge-able, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.

31. Capital management

The primary objective of the Company’s capital management is to ensure that it has an appropriate financial structure and preserves the ability to continue its business as a going concern.

According to the balance sheet as at 31 December 2010, the Group’s debt-to-equity ratio was 2.57:1 (2009: 2.06:1) and the Company’s was 0.89:1 (2009: 0.76:1).

32. Approval of financial statements

These financial statements were authorised for issue by the Company’s Board of Directors on 25 February 2011.

18th-19th Floor, Bangna Towers A Building, 2/3 Moo 14, Bangna-Trad Road Km. 6.5, Bangkaew, Bangplee, Samutprakarn 10540 Tel. 0-2730-2100 Fax. 0-2751-9484-90 Website : www.nawarat.co.th E-mail : [email protected]

NAWARAT PATANAKARN PUBLIC COMPANY LIMITED

Documents

Annual Report 2010 - listed companynwr.listedcompany.com/misc/ar/ar2010.pdf · 2011-04-07 · VSPN Property Limited Highway No.3 Sta.136+400 km. Sukhumvit Rd, Banglamung, Chonburi